Guidelines for the Transfer and Dematerialisation of Re-lodged Physical Shares

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Physical share certificates were a norm in the earlier days. With SEBI’s guideline of mandatory dematerialisation of physical shares, it has become important to move to the digital world. The process is kept simple and once converted, there are multiple benefits that shareholders enjoy while trading. Online trading is the future and the dematerialisation of shares is the first step towards it.

SEBI has issued multiple guidelines for regulating physical shares including a mandatory dematerialisation of physical shares. Earlier, owning physical shares was a norm however due to the constant hassle of maintaining physical shares, SEBI changed rules for a complete digitalisation. If you have physical shares, this article will take you through the process of dematerialisation and its benefits, as well. 

Introduction to Physical Shares and Their Dematerialisation

Physical shares, as the name suggests, are those shares that are available in a physical form. These are owned through documents called physical share certificates featuring the owner’s name, T&Cs and value of the share. Brokers, traders, investors or even companies used to own physical shares. 

In olden times, the stock market was a legitimate physical space where traders and investors had to be physically present for buying and selling. Transferring these shares meant a physical transfer of certificates of ownership. 

Since trading has become digitalised over the years, physical shares started to gradually lose their value, pushing SEBI to issue mandatory dematerialisation guidelines. Dematerialisation of shares is a simple process of converting physical shares into an electronic form. This can be done either by converting them into electronic form into your demat account or storing them in a depository in the form of bonds or shares. 

There are two government-approved depositories for dematerialisation:

  • The National Securities Depository Limited (NSDL)

  • The Central Depository Services Limited (CDSL)

These two depositories perform all the work of dematerialisation, whether you want to turn them into your demat account or store them in form bonds. 

Understanding the Concept of Re-lodged Physical Shares 

The dematerialisation of physical shares has been made mandatory and those physical shareholders who failed to transfer or dematerialise their physical shares, have to re-lodge their shares. SEBI has issued a notification specifically re-lodging of physical shares. Re-lodged physical shares have to be converted to electronic form before the deadline prescribed by SEBI to avoid losing their value. 

SEBI Guidelines on Transfer and Dematerialisation of Re-lodged Physical Shares 

SEBI has put out a notification regarding the dematerialisation of re-lodged physical shares on 7th September 2020. Firstly, the last date to transfer and dematerialise pre-lodged physical was fixed for 31st March 2021 post which, no transfer or dematerialisation would be allowed. Additionally, dematerialising physical shares was made mandatory within the stipulated time. 

Followed by this another notification, on 2nd December 2020, was issued by SEBI featuring important guidelines for the dematerialisation process. These included:

  • All the proceeds of transfer or dematerialisation of pre-lodged physical shares will be provided but RTA will hold the physical shares and intimate the owner about future processes/confirmation.

  • A Demat request has to be sent to depository participants within 90 days of receiving confirmation.

  • If a request is not sent within 90 days, the depository account will transfer those shares to the company's suspense escrow demat account. Shares in these accounts are called unclaimed shares. 

  • The depository participant will play a key role in approving the request or declining it. 

Process for Dematerialisation of Re-lodged Physical Shares  

The process of dematerialisation of relodged physical shares is rather easy and requires you to follow a simple process-

  • Open a Demat account

Firstly, you need to open a demat account with a DP of your choice. Opening a demat account requires you to simply fill out a form, complete KYC and provide documents for registration. 

  • Request with the depository participant

To dematerialize your relodged physical shares, you have to request a dematerialisation request form. Fill out this form and submit it to the DP under which you have created your demat account. The DP will approve and confirm your request, post that your shares will be shown on your demat account. 

  • Documents required

Dematerialising physical shares requires you to be prepared with certain documents including- A government-approved identity card, residence proof, bank statement/passbook and original physical share certificate.

Benefits of Dematerialising Re-lodged Physical Shares 

Dematerialising re-lodged physical shares have been made mandatory and while the process appears as an additional work, there are multiple advantages attached that you do not want to miss out on. Take a look at these benefits:

  • Convenient and accessible

Dematerialisation of physical shares simply means that now you will have all your shares available in an electronic form making them accessible at all points of time. Whether you want to trade or transfer your shares, you can do it with a simple touch of finger as opposed to physically visiting the stock market. 

  • Safety and privacy

Demat accounts are based on strict safety and privacy guidelines that make all your shares safe. Additionally, now you do not have to worry about physical share certificates being damaged or stolen.

  • Cost-efficient

Trading with physical shares included additional costs in the form of stamp duties and more. Once you have your shares in your demat account, you do not have to deal with hidden costs. 

  • No limitations

Physical shares have several limitations in buying/selling. Shares in your demat account allow you to buy/sell even a single share as per your financial situation.

Challenges in the Transfer and Dematerialisation of Re-lodged Shares

The process of transferring and dematerialising relodged physical shares is simple, however, there have been instances where physical shareholders have faced challenges. Here are challenges that must be considered to avoid facing them:

  • Wrong demat account

Opening a demat account is as easy as opening your account on a social media platform. However, shareholders have faced issues as they found themselves stuck with a fraudulent depository participant. This has led to shareholders losing their shares.

  • Request approval

Since the SEBI guideline gave only a few months to transfer and dematerialise physical shares, DPs found themselves loaded with lakhs of requests that resulted in delayed approvals. 

  • Technology interface

The dematerialisation of physical shares is simply a conversion into an electronic form. However, with many shareholders not comfortable with online methods, opening a demat account or conducting research to find a reliable DP for a demat account became a challenge. 

Tips for a Smooth Transition to Dematerialised Shares 

Now that you are well-versed with the concept of dematerialisation of shares, its benefits and challenges let’s learn tips to make the process smooth. We have prepared a list of tips for a smooth physical share transfer based on SEBI guidelines and challenges faced by physical shareholders:

  • Due diligence

Digitalisation has made it easier for you to conduct research and analyse the history of players in the stock market as there is abundant data available online. Make sure to conduct deep research before proceeding with a physical share transfer or dematerialisation of shares. Acting diligently can save you from all kinds of risks attached to the transition process. 

  • Depositories
    Remember that the government has approved two depositories namely National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and you have to rely on only these two for the entire process of physical share transfer. 

  • Demat Account
    Choosing a DP before opening a demat account requires you to research and find what best suits your needs. For instance, a reputed stockbroker is a reliable choice if you wish to trade your shares and a bank is a good DP if your goal is to transfer your physical shares in the form of bonds and store them. 


Physical share certificates were the players in the olden days. Today, the stock market is completely digitised to make trading and investing fast, convenient and accessible to everyone. If you own a physical share, then you need to go for a physical share transfer. You must convert it into an electronic form before the deadlines, as given by SEBI, lapse. All you need to do is open a demat account with a reliable DP, fill out the DRF and wait for the depository to send you approval and confirmation.

The process of physical share transfer or a conversion is simple yet it requires you to act diligently as it involves financial dealings. Once done, there are multiple advantages that you get to enjoy including increased profits and enhanced control over your shares. 

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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Frequently Asked Questions

What are re-lodged physical shares?

Answer Field

Relodged physical shares are those shares that are held by owners physically. Owners are given a physical share certificate for ownership over the shares and the certificate is used to sell/buy/transfer these shares. 


What are the main SEBI guidelines for the dematerialisation of re-lodged physical shares?

Answer Field

SEBI guidelines state that all proceeds from transferring or dematerialising pre-lodged physical shares will be given, with the RTA holding the physical shares and notifying the owner of future steps. A Demat request must be sent within 90 days, or the shares will move to the company's suspense escrow account as unclaimed shares. 


What documents are required for the dematerialisation of re-lodged physical shares?

Answer Field

If you are applying for dematerialisation of relodged physical shares make sure to keep these documents ready and handy- govt-approved identity card, residence proof, bank statement/passbook and original physical share certificate.

What are the common reasons for the rejection of physical shares during dematerialisation?

Answer Field

Physical share’s dematerialisation requires approval from the depository. The main reasons for rejection of a request include fake documents, lapse of time for application and damage of physical share certificates.

How long does it take to complete the dematerialisation of re-lodged physical shares?

Answer Field

Dematerialisation of re-lodged physical shares is a simple process but can take up to 3-5 months before your shares start reflecting in your demat account.

What are the benefits of dematerialising re-lodged physical shares?

Answer Field

Dematerialising re-lodged physical shares means the physical share transfer into an electronic form that brings several benefits including accessibility, convenient trading and management, cost-effectiveness and informed decision-making.

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