Procedure for Dematerialisation

Steps:

1. Client/ Investor submits the DRF (Demat Request Form) and physical certificates to DP. DP checks whether the securities are available for demat. Client defaces the certificate by stamping ' Surrendered for Dematerialisation'. DP punches two holes on the name of the company and draws two parallel lines across the face of the certificate.
2. DP enters the demat request in his system to be sent to NSDL.
2A. DP despatches the physical certificates along with the DRF to the R&T Agent.
3. NSDL records the details of the electronic request in the system and forwards the request to the R&T Agent.
4. R&T Agent, on receiving the physical documents and the electronic request, verifies and checks them. Once the R&T Agent is satisfied, dematerialisation of the concerned securities is electronically confirmed to NSDL.
5. NSDL credits the dematerialised securities to the beneficiary account of the investor and intimates the DP electronically. The DP issues a statement of transaction to the client.

Detail Process

1. DP provides dematerialisation request forms (DRF) to their clients.
2. The client completes the DRF in all respects and submits to the DP along with the security certificates to be dematerialised.
3. The DP checks the DRF for validity, completeness and correctness. The following points shoud be checked particularly :

• The security certificates sought to be dematerialised are attached to DRF.
• The attached security certificates are marked (defaced) with the words 'Surrendered for Dematerialisation'. The size of the stamp should be atleast four inches in length and one inch in width (except GOI securities). DP must ensure that the security certificates submitted for dematerialisation to the Issuer or its Registrar and Transfer Agent, bear the DP name, DP Id and Client Id. This is a precautionary measure to prevent misuse of share certificates by anyone.
• The certificates are not mutilated or defaced in a manner affecting any material information.
• The name of client on DRF and the certificates is exactly the same as in the client's account in DPM. However, minor variations in the name (like abbreviated name, initials in place of first name, middle name, minor spelling mistake in the name) may be permitted if it can be reasonably established that both names are of the same person. The permitted variations refer to initials not being spelt out fully or put prior to after the surname. In such cases, if the signature on the DRF matches the specimen signature available with the DP, the securities can be considered for demat.
• Details like security type, face value, paid-up value, pari-passu status, certificate numbers, distinctive numbers, number of certificates, total quantity of securities and lock-in status are filled-in correctly.

      Separate DRFs have to be submitted for:

• free and locked-in securities;
• securities locked-in for different reasons;
• each ISIN;
• securities of different paid-up value; and
• for each client account.

      DRF is signed by:

• the sole holder in case of single holding;
• all joint holders in case of joint holding;
• authorised signatories in the case of corporate accounts;
• constituted attorney in the case of NRI accounts.
• The signatures of the client as appearing on DRF should match with the signatures in the records of the DP. If the signatures do not match, the DP should satisfy itself about the identity of the client. If necessary, the DP may insist on attestation of DRF from bankers of the client. DRF should be signed by all the holders and match with specimen signatures. If the client has a signature registered with the company which is different from the specimen signature given to the DP, the client may be advised/allowed to affix both signatures on the DRF.

4. If the DRF and the accompanying security certificates are not found in order, the DP should return the DRF and certificates.
5. If DRF and accompanying certificates are found in order, the DP should accept the DRF and issue an acknowledgement to the client.
6. The DP should enter the dematerialisation request in DPM. DPM generates a request number (DRN), which should be mentioned on DRF.
7. An authorised person, other than one who entered the DRF details in the DPM, should verify the details of DRN and release a request to NSDL.
8. Once the DP has received the certificates defaced by the investor, the DP punches two holes on the name of the Company and draws two parallel lines on the face of the certificate. The DP should forward the DRF and the relevant security certificates to the Issuer or its R&T Agent for dematerialisation. DRF and enclosures have to be sent at the "address to which physical certificates to be sent" communicated by NSDL. The forwarding letter should refer to the allotted DRN and should be sent within seven days of accepting it from the client.
9. The Issuer or its R&T Agent verifies the DRF and the accompanying certificates for validity, completeness and correctness. They also match the details with the intimation received from NSDL against the same DRN.
10. In case DRF is not found to be in order, the Issuer or its R&T Agent sends an objection memo to the DP, with or without DRF and security certificates depending upon the reason for rejection.
11. The DP informs the client accordingly and requests removal of reasons for objection. The DP removes these or provides additional information to the Issuer or its R&T Agent within 15 days of receiving the objection memo.
12. If the DP fails to remove the objections within 15 days, the Issuer or its R&T Agent may reject the request and return DRF and accompanying certificates to the DP. The DP informs the client accordingly. The DP also returns the security certificates to the client and obtains an acknowledgement.
13. The DP, if the client so requires, may generate a new dematerialisation request and send the securities again to the Issuer or its R&T Agent.
14. If the Issuer or its R&T Agent finds the DRF to be in order, it informs NSDL and authorises it to create the appropriate credit balance in the client's account. DPM automatically credits the client's accounts when DM is updated. For the purpose of income tax calculations, the date of credit of securities by dematerialisation is taken as the date of acquisition of shares.
15. The DP, on receiving confirmation of credit entry in DPM, informs the client.
16. An R&T Agent is required to confirm/ reject a demat request within 15 days from the date of receipt of physical shares.

Source: Handbook for NSDL Depository Operations Module