How to Convert Physical Shares into a Demat Account

Buried in old files, those paper share certificates from your parents or grandparents might look like relics of a forgotten era. But they could still hold real value. The only problem is that in the physical form, they're about as useful as a DVD in a house with no player.

Physical shares are easy to misplace, damage, or even forge. Plus, you can't sell or transfer them on the stock market anymore. Since 2019, India's market regulator, SEBI, has made it clear that paper shares are out, and digital is the only way forward.

Well, then, how can you take advantage of those old share certificates?

Simple: By dematerialising them.

It might sound complicated, but trust us, it's not. Once it's done, those forgotten papers could turn into active, tradable investments..

This guide will walk you through exactly how to make that switch. From gathering the right documents to navigating the conversion process, we've broken it down into easy steps.

Because if those certificates are worth something (and they often are), the last thing you want is for them to stay locked in a format that's no longer usable.

Table of Contents

• What is Dematerialisation? 
• Why You MUST Convert Physical Shares to Demat 
• Checklist: What You Need Before You Start
• The Step-by-Step Process: How to Convert Share Certificates to Demat
• Understanding the Costs: Dematerialisation Fees & DP Charges
• Common Problems and Reasons for Rejection

What is Dematerialisation? 

Dematerialisation might sound like a sci-fi plot twist, but it's really just a fancy way of saying: "Hey, let's ditch the paper and go digital".

In simple terms, it means converting your physical share certificates into an electronic format that lives safely in a digital account. No fading ink, no paper cuts, no risk of your dog chewing up your portfolio.

Here's what you need to know:

• Physical shares: These are the official paper documents that say you own a piece of a company. Back in the day, this was the only way to prove ownership. However, they're easily lost, damaged, or forged, and you can't even sell them unless you convert physical shares to Demat.
   
• Demat account: This is where your shares go once they're digital. Think of it like a bank account, but instead of money, it holds your shares safely in electronic form. You need one to hold, trade, or transfer shares.
   
• Depository: These are the guardians of your digital shares. In India, we have two: NSDL and CDSL. They keep everything safe and in order. Once shares are dematerialised, the depository becomes the Registered Owner (on paper), but you remain the Beneficial Owner, which means all rights and benefits stay with you.
   
• Depository Participant (DP): Your go-to person (or platform) for managing your Demat account. This is usually your stockbroker (like Zerodha, HDFC Securities, etc.) or your bank. DPs help you open the account and handle the Demat process.
   
• Registrar and Transfer Agent (RTA): These folks work behind the scenes. They're in charge of keeping company share records and will verify your physical certificates before they're converted to digital.

SEBI keeps the whole system running tight, making it safer, faster, and way less stressful than dealing with stacks of paper. Welcome to the future of investing.

If you want to learn more about NSDL Demat accounts, their features, charges, and fees, read and explore all the details before you convert your physical shares into demat form.

Curious about CDSL Demat accounts and how they compare? Learn more about CDSL Demat accounts here and find out what makes them unique.

Why You MUST Convert Physical Shares to Demat 

Holding on to physical share certificates today is a bit like clinging to floppy disks in a cloud-storage world. If you're wondering how to convert physical shares into Demat, or more specifically, how to convert share certificates into a Demat account, you're on the right path. And yes, it's something you absolutely need to do.

• Mandatory: SEBI has drawn a hard line: physical shares of listed companies can't be sold or transferred unless they're dematerialised. That means if you want to trade or access the value of those certificates, you have to convert physical shares into Demat form.
• Safety & security: Paper shares are vulnerable. They can be misplaced, stolen, damaged, or even forged. But when you convert physical shares to Demat, your holdings are stored digitally. This keeps them safe from coffee spills, curious pets, or sketchy handwriting.
• Convenience and speed: The process is smooth, and transactions happen at lightning speed. There are no long waits or courier drama. Settlement usually wraps up in T+1 (trade day plus one), so your shares are in motion almost as fast as your swipe.
• Reduced costs: This is one more reason to convert physical shares into a Demat account. There's no stamp duty on Demat share transfers. Less paperwork, less cost. Win-win.
• Corporate actions without the chase: Once shares are dematerialised, all those nice little perks like dividends, bonuses, and stock splits will show up directly in your account. No more chasing cheques or wondering if you missed out.
• One dashboard: With your Demat account, you can see all your investments (shares, ETFs, bonds, mutual funds) in one tidy place. Real-time updates make portfolio tracking a breeze.
• Loan eligibility: If you're ever short on cash, you can pledge electronic shares as collateral quickly. No fuss. Much faster than trying to convince a bank that your old paper certificates are legit.
• Easier transmission: In case of the original holder's passing, converting share certificates to Demat makes transferring ownership to legal heirs or nominees faster and less complicated. It spares your loved ones unnecessary delays and paperwork.

All these perks prove that going Demat turns investing from a hassle into a breeze, making the move from paper to digital a total no-brainer.

Choosing the right stock broker is key to a smooth Demat conversion. Check out the top stock brokers in India here and find the one that suits your needs.

Checklist: What You Need Before You Start

Alright, before you dive headfirst into converting those old paper shares, let's make sure your toolkit is ready. Think of this as your pre-flight checklist, because once you're up in the digital skies, you don't want to realise you forgot your parachute.

Having all your documents in order will make the process of how to convert paper shares into Demat smooth and drama-free. 

The biggest thing to watch out for is making sure that your details line up across your documents, share certificates, and Demat account. Even a small mismatch can send your request into a black hole of delays.

Here's what you'll need to keep things moving fast:

Item	Description
Demat Account	An active account with a DP. Make sure the names on this account match exactly with the names on the share certificates.
Physical Share Certificates	The actual paper certificates. Make sure they're in good shape, with no damage or missing info.
Demat Request Form (DRF)	Get this from your DP. You'll need one per company. Shares from the same company but different folios can sometimes go on the same DRF if the holding pattern matches.
PAN Card	A self-attested copy is a must. The name should match your Demat account and share certificates.
Proof of Address	Self-attested copy of Aadhaar, passport, driver's license, or a recent utility bill. Must match what's on record with your DP.
Cancelled Cheque	Some DPs may ask for it to verify your bank details for dividend credits. If your account is already linked, you might skip this.
Passport Size Photos	Usually needed when opening a new Demat account. Keep a few ready just in case.

Getting these documents in order before starting the process can be the difference between a smooth ride and a paperwork pile-up, so make sure you have everything you need.

Looking for the best broker to help you convert your physical shares to Demat? Compare brokers and find the perfect fit for you.

The Step-by-Step Process: How to Convert Share Certificates to Demat

Alright, time to roll up your sleeves and actually do this thing. You've heard about why converting paper shares is important. You've got your documents in hand, and now you're ready to learn how to convert physical shares into Demat. 

It's not rocket science, but it does need attention to detail. So follow along and let's get you set up.

Step 1: Open a Demat account (if you don't already have one)

This is the first thing you must do to convert physical shares into Demat form. If you're already investing in the stock market, chances are you have one. But if not, pick a DP, like your bank or a broker (think Zerodha, HDFC Securities, Angel One, and so on) and get that account going.

Note: The name or names on the Demat account need to match the name or names on the share certificates exactly. If your share certificate says Mr A and Mrs B, the Demat account should also say Mr A and Mrs B, in the same order. If the order is different, you'll need something called a Transposition Form later in the process. This small detail can save you from big delays.

Step 2: Fill out the Demat Request Form (DRF)

Next, you need the Demat Request Form, or DRF. You can download it from your DP's website or pick it up in person. This is where you officially kick off the process of how to convert physical shares to Demat form.

Each company's shares need their own form. If the same company's shares are in different folio numbers, you might still need separate forms.

Fill out the DRF with the following details:

• Company name
• ISIN (International Securities Identification Number)
• Folio number
• Certificate number(s)
• Quantity of shares

Everyone listed as a shareholder must sign the form.

Step 3: Mark the share certificates

Now, prep those certificates. On the front of each one, write or stamp "Surrendered for Dematerialisation". This stops anyone from misusing the certificate later and is an essential part of how to convert paper shares into Demat form.

Do not sign anywhere on the certificate itself unless there's an old transfer deed on the back. All your signatures should only go on the DRF. Also, make sure the certificates are clean, legible, and not falling apart.

Step 4: Submit the documents to your DP

Time to send everything in. Your packet should include:

• The filled and signed DRF
• The original share certificates with the required surrender note
• A self-attested copy of your PAN card
• A self-attested copy of your current address proof (especially if your address has changed)

Some DPs may also ask for a cancelled cheque to link your bank account for dividends. Once you hand everything over, you'll get an acknowledgement slip with a tracking number called the Dematerialisation Request Number (DRN). Hold onto it.

Step 5: Behind-the-scenes checks

Your DP now sends everything to the Registrar and Transfer Agent (RTA), who verifies the certificates, cross-checks signatures and makes sure all your details match.

If the RTA gives the thumbs up, your physical shares are officially cancelled and marked as converted.

Step 6: Shares hit your Demat account

Once the RTA finishes verification, the Depository steps in to credit your Demat account with the electronic version of your shares. You'll usually get a notification by SMS or email confirming the credit.

The whole process takes anywhere from 15 to 30 days. Some DPs may say 25 days just to be safe, but if everything's filled out properly, it can move pretty quickly.

Ready to open your Demat account? Follow our step-by-step guide to opening a Demat account and get started on converting your physical shares to digital.

Understanding the Costs: Dematerialisation Fees & DP Charges

Converting your paper shares isn't going to empty your wallet, but DPs do charge nominal fees. While the dematerialisation process itself is standardised by NSDL and CDSL, each DP sets its own charges. 

If you've got a stack of certificates or you're opening a new Demat account just for this purpose, it's worth comparing the costs.

Generally, DPs charge:

• A fee per Demat Request Form (DRF) or per share certificate
• Potential courier charges
• An Annual Maintenance Charge (AMC)

Here's a snapshot of what some major DPs typically charge for converting physical shares into Demat account:

DP	Dematerialisation Fee	Courier Charges	AMC (Annual Maintenance Charge)	Notes
Zerodha	₹150 / certificate	₹100	Upto ₹100	BSDA rates vary
Angel One	₹20 / certificate	₹30 per DRF request for postage charges	Upto ₹100 (free for first year)	BSDA rates vary
Groww	₹150 / certificate	Actual courier cost	₹0	-

All charges are subject to GST and may change. AMCs and fees may vary based on account type or holdings value.

Discount brokers often offer lower or even zero AMCs, but their per-certificate dematerialisation fees might still apply. Full-service brokers may charge more in maintenance, but may bundle charges differently. So, if you're converting multiple certificates or opening a fresh Demat account, it would be wise to compare your options.

Common Problems and Reasons for Rejection

Even with the right documents, your request to convert physical shares to Demat can get rejected. Most of the time, it's because of small mistakes that are easy to avoid. Below are the most common problems, and what to do if they happen:

1. Signature mismatch: Your signature on the DRF must match the one in your Demat account and company records. If it's different, your request will be rejected. Update your signature with your DP first or get it attested by your bank before submitting the form.

2. Name mismatch: Your name must be the same as the one on the share certificate, Demat account, and DRF. Even small changes like spelling differences, missing initials, or name changes after marriage can lead to rejection. Use the same name everywhere. If your name has changed, send legal proof like a marriage certificate or gazette notification.

3. Torn or damaged certificates: If your share certificate is torn or unreadable, the DP won't accept it. First, apply to the company or RTA for a duplicate certificate. Once you have that, you can start the demat process again.

4. Wrong details in the form: If you write the wrong folio number, certificate number, or number of shares on the DRF, your request will be rejected. Check the share certificate carefully and fill in the details exactly as they appear.

5. Incorrect ISIN: Every company's shares have a unique number called ISIN. If you use the wrong one, your request won't go through. Ask your DP or check with the RTA to make sure you use the right ISIN for your shares.

6. Using one DRF for multiple companies: You need a separate DRF for each company's shares. If you try to combine multiple companies into one form, it will be rejected. Always use one DRF per company.

7. Shares are not eligible for Demat: Some companies, especially unlisted, delisted, or very old ones, are not approved for Demat by NSDL or CDSL. Check with your DP before you start the process.

8. Joint holder mistakes: If the shares are in joint names, the Demat account must have the same names in the same order. All holders must sign the DRF. If the order is different, also submit a Transposition Form.

9. Certificates not marked: Write "Surrendered for Dematerialisation" on all certificates. If not, your DP will reject them. This step is mandatory.

Avoid these slip-ups and your Demat process will be much smoother.

Conclusion

If you've got old-school paper share certificates lying around, you're basically sitting on a money time machine. They might look like something out of a history book, but they can still hold real value today. The only catch is that you've gotta dematerialise them (aka "Demat" them) before they're actually useful.

Dematerialisation means no more lost papers, no more chaos, just sleek, secure, and totally trackable shares in your Demat account. Plus, you'll finally be able to sell or transfer them without jumping through a million hoops.

If you're ready to take the final step (finding the right DP (broker) to help you convert those physical shares into Demat), Finology Select is the perfect place to start. Here, you can explore and compare 20+ of the best brokers in India, understand their pricing, features, and user reviews, and ultimately pick the one that fits your investment style.

Frequently Asked Questions (FAQ)

1. How much does it cost to convert physical shares to Demat?

The cost to convert physical shares into Demat depends on your DP. Most charge ₹25 to ₹150 per Demat Request Form (DRF) or share certificate, plus courier charges and GST. There is no stamp duty involved. 

2. What if the shareholder has passed away?

If the shareholder is deceased, the shares must first be transmitted to the legal heir or nominee. This involves submitting documents such as the death certificate, succession certificate or probate of will (if applicable), a transmission form, and KYC documents. Once the shares are transferred to your name, you can then convert physical shares into a Demat account following the standard procedure.

3. Can I sell physical shares without converting them?

No. SEBI regulations require that you convert shares from physical to Demat before selling them on the stock exchange. Trading of physical shares in listed companies is no longer permitted.

4. How long does the conversion process take?

It usually takes 2 to 4 weeks (15 to 30 days) to convert paper shares into Demat, depending on how quickly your DP and the RTA process your documents.

5. What if the shares are in joint names?

To convert share certificates to Demat, the joint Demat account must have the same names in the same order as on the physical certificate. If the order differs, you'll need to submit a Transposition Request Form along with the DRF.

6. What is an ISIN and why is it important?

The ISIN (International Securities Identification Number) is a unique 12-character code that identifies each security. When you convert physical shares to Demat, the shares are tracked using their ISIN instead of physical certificate numbers.