The recent amendments in provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, mandate the conversion of shares and other types of securities of listed companies from the physical form to the Demat form if they want to do any transfer.
With effect from April 1, 2019, the transfer will be possible only after dematerialisation of these physical shares. The latest rule restricts the transfer of the securities in physical form only for the listed companies whereas Investors may continue holding non-listed shares in physical form. They will be able to sell/transfer the shares as per their choice even after April 1, 2019.
In addition to this transmission and transposition of shares held in tangible form also will still be allowed. Transmission happens upon the demise of any or all shareholders. Transposition refers to the change in ownership structure.
For instance, if the ownership patterns change from A & B (in this order) to B & A or from A & B & C to B & A & C, then the transfer will still be possible in paper form even after April 1, 2019. However, the conversion to Demat is highly suggested as it accompanies many other benefits.
This is a crucial step taken by the SEBI to eliminate the fraudulent activities while curbing the manipulation risk in the physical transfer of securities. Adding eggs to one’s beer, the share in Demat form will ease the selling and transfer process while boosting the convenience and safety of transactions for investors.
High time for all the investors, holding shares and securities in a tangible form, to ensure liquidity by opening a Demat account ASAP and submit a request for dematerialisation of their shares. According to the SEBI guidelines, it takes around 21 days for the process to complete while may differ in case of some companies. You can view the status of dematerialisation with your DP.
Note: LIC future plus and Future plus bonds come under Mutual Fund schemes. All the mutual fund units can be converted into Demat form.