A Simple Process for Dematerializing Shares Using the RTA

 The procedure of conversion of physical share certificates in the electronic or dematerialized form is said to be dematerialization so as to handle them in a precise way. The method of Dematerialization could indeed get compared to transferring your money to a bank account rendering a person to maintain the proper records of his/her financial transactions.

Physical share certificates of shareholders can get substituted from Electronic book entries in the case of the dematerialization of shares, in which debit entries indicate the selling of shares while shares purchase would be shown as the credit entries. 

With the service of a Demat Account handled by a Depository, the shares or debt investment made through the investors could be kept in the electronic or dematerialized form. 

From depository participants (DP) and registrar and share transfer agents like SAG RTA, CAMS, etc the depositories can ask for assistance so as to hold the dematerialized shares of investors. Through  NSDL and CDSL depository in India, SAG RTA beneath the Registrar & Transfer Agent Services furnished the facility of the dematerialization.

Upon the urge of the investors, the depository would be an entity that handles all the securities of the investor in electronic form. Central Depository Services Ltd, and National Securities Depository Limited would be the two depositories in India. 

From the depository participants (DPs) the depositories can ask for help so as to function as the intermediary between the issuer company and the actual DP. Through providing the interference between the depository and the investor the DPs help the investors to buy the shares of the companies. DPs support in handling the Demat accounts of the investors precisely.

For the current procedure, a registrar and share transfer agent support the depository participants (DPs) in the security (e.g. bonds, shares, debentures, etc.) dematerialization procedure.

Read Also:- Demat Account – What it is And How To Open A Demat Account Online

To Finish the process of dematerializing the shares of the companies they are needed to take assistance from the registrar and share transfer agents, for example, SAG RTA. the share dematerialization facility for companies and shareholders would be provided by the SAG RTA. 

A Process For Dematerializing Company Shares

• A company is obligated to make the modification in its articles of association if they want to become a share issuer or provide the facility related to Demat. 
• In a general meeting, the company's owner must pass a separate resolution. This will enable the company to issue the shares to the investors in the dematerialized or electronic form.
• Registration with both the Central depositories that is the National Securities Depository Limited (NSDL) and Central Securities Depository Limited (CDSL) should be completed if the private companies from India desire to apply for the dematerialization of the shares. To get registration the private firms must meet the requirements of both depositories. 
• A company will receive International Securities Identification Number (ISIN) for each of its shares If they fulfill the terms and conditions of the Depository. 
• “ISIN” is a unique identification 12-digit alphanumeric number that is linked with all types of securities, i.e., security, shares, Debentures, Bonds, etc. as well as it is offered via the depository to companies proceeding via the process of dematerialization.
• The firms who want to transfer their dematerialized shares into the shareholder’s  Demat account are needed with the Demat connectivity from the depositories like CDSL and NSDL. A tripartite agreement between the company, the depositories, and the transfer agent is mandatory to take on the Demat connectivity.
• In the identical procedure, SAG RTA which is a Registrar and Transfer Agent provides the services related to the company/issuer agent. Services such as dematerialization, initial public offers, rematerialization, and corporate Actions would get furnished by SAG RTA including that it eases the interaction between the investors and the depository participants. 
• The company that wants its physical shares to get Dematerialized must follow certain steps. In India for companies, the rules are being made via two national depositories like NSDL and CDSL.

Read Also:- What is the Procedure To Convert Physical Shares into The Demat Form?

How Can a Dematerialized Firm Share Be Transferred into a Demat Account?

• With a depository participant (DP), the registered shareholder of the company is initially required to open the Demat account and take the account number. 
• After that, a Demat Request Form (DRF) would be obligated to get filled out by the registered shareholder and submit the same including with that the dematerialization to the depository participants of the physical share certificate is needed to be filled. 
• Registered owners must utilize a separate DRF for each ISIN. a separate Demat request would be required to be filed against both the free shares and lock-in shares if the Beneficiary Owner (BO) holds both free and lock-in shares against the identical ISIN.
• The preciseness of the DRF furnished through the registered shareholders shall get verified subsequently through the Depository participant (DP). 
• On the NSDL and CDSL, DP can raise the request as well as similar information could be intimated to the share issuing firms along with the Registrar and Transfer Agent.
• The issuer/ Registrar and Transfer Agent (RTA) shall validate the genuineness of the deposited share certificates to the DP and then the request would be confirmed. 
• DPv eradicates the submitted physical share certificates and generates a Demat Request Number (DRN), after the successful raising of the Dematerialization Request (DR). The same DR shall get sent to the depository via electronic communication in which the DRF along with the share certificate shall get sent to the issuer company/ R&T Agent. 
• An equal number of securities in the Demat account of the Beneficiary owner (BO) would need to be credited by the depository that has been maintained through the NSDL or CDSL, post obtaining the confirmation.
• In the registered shareholder's Demat account, it shall transfer an equal number of securities which has been held with the CDSL and NSDL, after the depository receives the request.

While transferring the Dematerialized shares below mentioned are the roles of the Registrar and Share Transfer Agent

In the concern of completing the transfer of dematerialized shares the Registrar & Share Transfer Agent performs a vital role since they are counted as those who ask the related firms prior to making any approval to the investor's request for the subject of transferring of shares. 

At the time of the dematerialization process for the ease of investors/shareholders and mutual fund houses, Registrar & Transfer Agent, like SAG RTA, CAMS, and Karvy indeed manage the responsibilities of the documentation. R & T Agent does all the background documentation work to support the fund houses.

Through the particular shareholder, Delivery Instruction Slip (DIS) is needed to transfer his shares into the Demat Account of the other shareholder. It is important to carefully handle the Delivery Instruction Slip (DIS) since it works as an investor checkbook.

For transferring or receiving the shares from his or her Demat Account the shareholders that trade on the traditional stock exchanges must tell their DP and R&T agent. 

Before any other buyers account for making an off-market transaction i.e the transfer of shares, the DP is to get informed by the shareholder to make the same transaction succeed and could assist the registrar and transfer agent for that. 

Via the identical process, any additional security (eg., bonds, debentures, etc) could get transferred to the buyers of other accounts through the shareholders by informing the related DP of that. The Demat account number must be cited precisely in DIS.