Demat to be mandatory from 1st April for stock transfer/exchange
Posted on: 29/Mar/2019 2:50:37 PM
Security and Exchange Board of India (SEBI) has announced that the transactions of sock-related documents transfer must be carried out only in the Demat electronic mode of document procedure.
What is a Demat account? - While trading online, the demat account is used to hold shares and securities in dematerialized/electronic format. Under dematerialization, your share certificates are converted from physical form to electronic form so as to increase their accessibility. You need a Demat Account number to settle trades electronically. The Demat account number is quoted for all transactions to enable electronic settlements of trades to take place. Every shareholder will have a Dematerialized account for the purpose of transacting. Access to the Dematerialized account requires an internet password and a transaction password.
As being done in a typical savings bank account where money is deposited, the stock shares are deposited with details in the Demat account. The transactions and maintenance of this Demat account is under the NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Ltd.) The customers can open a Demat account with the stock trading companies approved by NSDL and CDSL and deposit their shares and can also carry out stock trading.
In this situation, SEBI had informed that all document-related stock transfers must be entirely done in Demat mode. Earlier, the deadline for this was set as December 2018. Later, it was extended for another 3 months. Accordingly, this concludes by the end of this month, March. So, Demat mode of transactions will be implemented from 1st April. However, SEBI has informed that there are no restrictions for the investors to keep the paper-form of the documents regarding the shares.
However, when there are transferred to others, it will be done only through Demat mode. Some of the earlier transactions where some errors had occurred such as change of name, etc., which get returned, can also be transferred even after the above deadline. It is informed that this new regulation will not be applicable to name changes in the Demat shares, change in the order of the names-list.
