Remat is the process of conversion of security holdings into the tangible form with the reissue of a share certificate. A client can rematerialise his bonds and shares in demat form into physical form at any point of time but the securities sent for rematerialisation cannot be traded.
By-Law 9.4: Rematerialisation And Business Rule 11.2: Rematerialisation of securities -are the legal provisions applied in this process.
Many reasons contribute to the rematerialisation of shares which includes the non-transferrable nature of locked-in securities or no more desire to trade in bonds and shares.
Let us Understand it Deliberately:
For example when you don’t want to deal in shares and bonds any more but the shares are available in your demat account then an annual maintenance fee for the account will be charged on you which may range from 500 to 1,000 so in this case rematerialisation of your shares can be done to curb yourself from this unnecessary expenditure.
Many investors own infrastructure bonds in their demat accounts. The infrastructure bonds are locked-in securities with a lock-in period of five years. It means before 5 years, you can not transfer these securities if you want to switch on your demat account from one participant to another. In this case, you can shift your depository account by rematerialisation of your locked-in bonds.
The process of rematerialisation of securities is completed within the period of 30 days, and can be learned through these steps:
Submission of Rematerialisation Request:
The client has to submit the rematerialisation request of holdings in its account to the DP with whom he has an account.
Verification of Request:
When the DP receives the request form, it certifies that the form is filled properly by issuing a signed & stamped slip to the client as an acknowledgment. The DP verifies the signature of the client as on the request form with the specimen recorded in its documents. If the signatures do not match, the DP will ensure the identity of the client in another way.
The Realisation of Request to NSDL:
DP releases the request details in its DPM (software provided by NSDL to the DP) and sends the request form to the Issuer/ R&T agent.
While filling up the details, if it is found that the client’s account lacks enough balance, the request will not be accepted by D.P. and the same will be intimated to the client.
Issuance of RRN:
If the client’s account has sufficient balance, the DP will forward the request in the DPM and the DPM will issue a Rematerialisation Request Number (RRN), to fill in the space provided in the rematerialisation request form.
Verification of RRN Details:
Details entered for the RRN should be attested by a person except for the individual who entered the data.
Further Expression of Request:
The request is then released to the DM by the DP which is further forwarded to the Issuer/ R&T agent electronically.
Rejection of Request:
While processing the request, the Issuer/ R&T agent may reject the request & report some objections, seeking corrections and send an objection memo to the DP.
Acceptance of Request:
The Issuer/ R&T agent accepts the request for rematerialisation & procures it in printable form and further despatches the certificates to the client. Simultaneously sends an electronic confirmation to the DM.
The DM downloads this information to the DPM and updates the status of rematerialisation request in the DPM. The depository will revise the beneficiary account of the shareholder by removing the shares which have been rematerialized.
Reissuance of Physical Share Certificates:
Finally, the registrar will dispatch the physical share certificates to the shareholder, thus ending up the process.
Expenses Involved In The Remat Process:
As per the norms of Depositories Act, depository cannot levy any stamp duty is for transferring the shares when a remat request is made and only a nominal fee is charged for completing the process.