What Physical Shares Mean Today?

Before the internet took over our lives there was something called physical shares which are the paper form of today’s demat shares traded on a stock exchange. 

If you stumble across any of these shares today they might be worth a fortune. Probably because your grandfather or great-grandfather might have bought them ages ago and forgotten to convert them into demat.

If you’re lucky these physical shares could belong to companies whose price has risen drastically over the years. (But they could also be shares of companies who might have shut down!)

Whatever be the case if you have them, convert them ASAP. Here’s why:

#1. Currently, you cannot trade physical shares:

NOT GOING TO HAPPEN.gif

Physical share certificates were in vogue before Demat came into existence and they would be traded in a system popularly called as the open outcry system. (Remember that scene from the movie Guru where everyone was shouting in a marketplace to sell their shares).

They were the only proof one had of owning shares of a company. But after Demat was mandated in 2011 trading of physical shares on the stock exchanges stopped. The only way these can be transferred now is through private deals.

#2. Demat makes trading super easy and convenient :

Imagine the two situations

THEN: Earlier people actually had to shout out their selling price in a market. This was called the open outcry system. Because of this, the number of traders was very few.

Open Outcry
OPEN OUTCRY

NOW:  Today just by sitting at home you can type in your selling & buying price on an electronic platform and trade easily. And because of this more people have started trading which has increased prices and stock markets in India have become a big thing. 

electronic-trading
NOW

Demat has made shares accessible from any place eliminating the risks of fake securities, theft, etc. And ensured that sellers get their money and buyers get their shares on time.

#3. Helps in investing in various asset classes:

A demat account gives opportunities to invest in other asset classes like gold ETFs and commodity futures as well. 

#4. Directly credits your account with co-operate benefits:

giphy.gif

With Demat account all non-cash benefits like rights and bonus shares directly get credited to your account, ensuring faster disbursement and also leading to a reduction in brokerage cost.

So if you haven’t already converted them go get it done NOW.

The procedure is not that simple (But its worth it):

  • First one must open a dematerialized or demat account with a Depository Participant (DP). The DP is usually a share broker that one chooses according to their needs.
  • Once the account is opened you send the physical shares to the DP for him to submit it to the registrar of the company whose shares you own.
  • The registrar will then send a confirmation to the DP of having received the shares.
  • Once all the shares are dematerialized by the registrar he informs the DP and updates the books of accounts.
  • The DP then finally updates the demat account of the investor with the shares.

P.S.- To convert physical certificates into a demat mode, the name in the share certificate should match with the name of the demat account holder

 

If you face any difficulties while doing this, email us with your problems and we will guide you. 

 

 


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