The Indian stock market implemented the online trading system in 2019 which has resolved various issues involved in the previous offline open outcry trading system. With dematerialised securities, the trade settlement process is quicker and easier. There is greater transparency in the trading system. It has eliminated stances of forgery due to fake or delayed delivery of securities.

Why is Converting the Form of Securities Necessary?

One may hold old paper-based securities or receive inherited securities as a beneficiary. One must convert paper-based securities into the demat (digital) form.

If the shareholder wants to trade those paper-based shares, it is possible only with demat securities. Stock exchanges operate online and deal with an electronic form of shares only. In the online trading system, there is no place for paper-based securities.

Therefore, in case, any person still retains some old paper-based securities, they have to convert them into a dematerialised form, i.e., a digital form for online trading.

The Procedure to Convert Shares to Demat Form

The process of converting physical certificates into digital format is known as dematerialisation. It is a two-tier procedure.

• Sign up for a Demat Account: Dematerialisation of shares requires opening a demat account first.
• Fill in a Conversion Request Form: Then, the shareholder or beneficiary can raise a request to convert their paper-based shares to digital format.

Steps to Open an Online Demat Account

• Refer to a broker’s website registered with the SEBI (Securities and Exchange Board of India) to open a demat Access the demat account opening form.
• Enter basic personal details and PAN (Permanent Account Number).
• Upload documents required for KYC (Know Your Customer) processing in digital form – Identity proof, Resident proof, and Aadhaar card.
• Validate the ID through an in-person verification (IPV) Schedule a video call or record a short video while reading the given script and upload it.
• Submit the application for review and account activation.

Individuals can operate their demat accounts using the broker’s online trading app also

Steps to Fill Out Request Form for Conversion

• Step 1: Contact the stockbroker for a Dematerialisation request form (DRF).
• Step 2: Fill out the DRF, and attach physical share Mention ‘Surrendered for Demat Processing’ on every share certificate. Submit the DRF along with surrendered certificates to the broker.
• Step 3: The broker will process your dematerialisation request after submitting the surrendered A unique dematerialisation

registration number will also be sent with the form and certificates to the Registrar and Transfer Agent (RTAs).

• Step 5: The RTA will verify the form and share and approve the dematerialisation request. The number of shares to be converted is recorded in the Register of Members’ account which keeps the information about shareholders.
• Step 6: After a successful validity check, the shareholder will receive a request online for converting shares to a demat form. Then, the shares get credited to the beneficiary’s demat An acknowledgement is generated from the Register of Members confirming that the particular securities have been dematerialised successfully. It is forwarded to the broker also.

The physical share certificates will be destroyed, and the shareholder will have converted ones in their demat account only.

Now the shareholder can continue to trade these converted shares in demat form. Ensure that these shares are still listed on the formal stock exchanges. If they get delisted from the stock exchange, these shares will lose their value.

It is a straightforward process to convert paper-based shares into digital form. Demat securities can be traded online and help to save time. Evade trading hassles involved in physical shares in the offline trading system, like storage, forgery, and damage.