Physical Shares, Unclaimed Dividends / Shares, Recovery from IEPF

SEBI has recently amended relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to disallow listed companies from accepting request for transfer of securities which are held in physical form, with effect from 1 April 2019.

The shareholders who continue to hold shares and other types of securities of listed companies in physical form even after this date, will not be able to lodge the shares with company / its RTA for further transfer.

They will need to convert them to demat form compulsorily if they wish to effect any transfer. Only the requests for transmission and transposition of securities in physical form, will be accepted by the listed companies / their RTAs.

Retrieve your lost and unclaimed investment made in shares in quick time and lowest cost , Call or Whatsapp Dharawat Securities on 8108303330  

Please fill your details and our Physical Share Consultant will revert soon

Dharawat Securities is leading firm engaged in buying and selling of Pre-IPO, Unlisted, Delisted shares with experience of over 20 years.

We will help you recover your investment amount by providing best experienced services and least documentation

Our Services

  • Physical Shares and conversion from Physical to Demat Shares (Dematerialization)
  • IEPF shares and dividend warrants claim
  • Transmission of Shares (death claim matters)
  • Old Physical Shares
  • Loss of Share Certificate (Duplicate Issuance of Shares)
  • Rejection of transfer like Sign Mistatch, Insufficient Documents, Nominee etc
  • Name Mistatch – Name Change, Name Addition, Deletion
  • Bonds/ Securities / Debentures / Unrealized Proceeds from matured deposits of companies
  • Mutual Funds
  • Bank Deposits
  • Legal Disputes

Reason of Unclaimed Investments

  • Lost Certificates/Documents
  • Succession in case of Death of Investor
  • Signature Mismatch
  • Issue of Duplicate Documents
  • Conversion of Physical to Demat
  • Change of Address
  • Name Change of Company, Amalgamation, Merger & Reverse Merger Delisting Demerger etc .
  • Matured Insurance, In-operative Bank a/c etc
  • Name Correction
  • Important Legal Documents like Probate, Succession Certificate, Nomination, Will

We also provide free Demat account exclusively for Dematerialization Services to convert physical share certificates into demat mode.

Background There was a time not too long ago when shares were stored in physical form viz. paper certificates. On every share issued, and traded, physical share certificates needed to be issued or transferred. This was a humungous and tedious task. This era of physical paperwork was before 1996. Post that SEBI issued an advisory to convert all physical shareholding into a demat form.

The physical share certificate market is vulnerable to fraud, being misplaced, or simply lost on account of relocation, or death. To protect the interest of the shareholders therefore and ensure that the funds are not misappropriated, SEBI vides its circular dated 3rd Nov 2021 made KYC mandatory for all investors. 

It directed investors to submit copies of PAN Card, email, mobile number, bank account, and nomination details to the Company/ Registrar & Share Transfer Agent (RTA). It also stated that the RTA will freeze any folios if any of the above-mentioned documents/details are not made available on or after April 01, 2023.

After December 31, 2025, the RTA/company will send the frozen folios to the administrative authority by the Benami Transactions (Prohibitions) Act, 1988 and/or the Prevention of Money Laundering Act, 2002”

SEBI along with the ministry of corporate affairs has initiated the Investor Education and Protection Fund (IEPF)  which works as safe custody of shareholders’ fund and pools all the dividends of the asset management companies, matured deposits, share application interests, debentures, interests, etc. that are unclaimed for a minimum period of seven years. 

All these measures have been undertaken to ease the path of recovery, and make the entire process smooth and streamlined for restoring the shares to their rightful owner. One must remember that in the event of death, the legal heir has to initiate a transmission of the shares and not a transfer. Transmission is the operation by law whereas transfer is a voluntary act initiated by the shareholder.

Recovery of shares, therefore, refers to the entire spectrum of activity that entails recouping such securities through the processes of transmission of shares, transfer of shares, retrieval of bonus issues, and unclaimed dividends. In short, protecting investors’ interests is IEPF’s primary concern.

A dividend warrant can be returned on non-delivery due to several reasons such as change in address, non-existence of an address or the absence of a shareholder due to his demise with no heirs or family members aware of the investment, etc.

Dematerialisation of shares is converting physical share certificates of a particular company to an electronic format. These Dematerialised shares are then held in a depository account that you open. Referring to the current stock trading norms, share Dematerialisation is required to sell or transfer your shares to another account.

You don’t have to worry about the authenticity of Dematerialised shares because each electronic record of shares is authenticated with ISIN (a system of assigning a unique number to a particular share). The problems of storage and maintenance have also been eliminated, thanks to the electronic storage system adapted for Dematerialised shares.

Ministry of Corporate Affairs (MCA) has notified vide its notification dated 10th September, 2018 that all unlisted public company shall issue securities only in dematerialised form and facilitate dematerialization of all its existing securities. The effective date for the notification is 2nd October 2018. All transfers of shares shall be in the dematerialisation form only of and after 2nd October 2018.

Dematerialisation paved the way for the new era of electronic share trading. It has made a significant contribution to the growth and popularity of stock trading among the general public. While Dematerialisation may appear to be a lengthy process, it requires very little user interaction. The entire process of converting physical stock certificates to Dematerialised stock certificates is expected to take 2 to 3 weeks. You must note that only those shares can be Dematerialised which are actively traded on the stock exchange. Once your Demat account has been credited, you can sell or transfer your shares whenever you want.

In this case, you will not be able to sell or transfer your shares after April 1, 2019. You will have to wait for demat of shares before being able to sell/transfer them. However, you may continue to hold your shares in physical form, if you desire so.

As per the SEBI guidelines, it takes approximately 21 days for the process to complete; however, it may vary in case of some companies. You can check the status of Dematerialization with your DP.

Investors may continue holding non-listed shares in physical form. They will be able to sell/transfer the shares as they wish even after April 1, 2019. However, you may suggest your non-listed company to join CDSL / NSDL so that even those shares can be dematerialized and shareholders can benefit from the same.

The Registrar & Transfer Agents (RTA) can freeze the physical shares if it finds any holder’s name is missing. RTA will have to cancel the request for dematerialisation in case of any changes in the order of holders’ names. It means the name order should be the same as that of physical shares.

Benefits of Demat Shares / Dematerialization

There are several Benefits of Dematerialization and convert Physical Shares to Demat form. Explore all the benefits of a Demat Account. Demat comes with corporate benefits like interest, dividends, refunds, etc credited to your demat account. Also there is Convenience, Safety and Nomination and Loan facilities.

  • Paperless transactions
  • Easier management of shareholders
  • Convenient share handling
  • Improved security for stocks
  • Transfer happens almost immediately, reduces time-lag.
  • Transparency in transactions.

FAQs:

  • Can I still convert physical shares into Demat?

Yes, you can convert your physical shares into Demat by opening a Demat account. A Demat account dematerialises your physical shares and converts them into an electronic format. However, make sure that the account is opening in the same name as the owner of the shares. In the case of joint owners, the Demat account must be opened in the name of all owners.

  • Is it compulsory to Demat physical shares?

Yes, it is compulsory to Demat your physical shares. Dematerialisation simplifies investing and trading and removes the scope of fraud and scams. This rule has been set up by the Securities and Exchange Board of India (SEBI). SEBI mandates all investors to only trade and invests in shares in the dematerialised format. For this purpose, you need to open a Demat account.

  • What is the physical form shares?

Physical shares are certificates of share that specify your ownership share in a company. Although they are obsolete now, they were used before and issued to investors whenever they purchase shares of a company. Investors had to store these certificates carefully until redemption. However, physical shares have now been replaced by Demat shares that can be stored in a Demat account in a dematerialized or electronic format.

 

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