SEBI Guidelines for Transfer of Physical Shares

By Advisorymandi
5-November-2018 8:32:40 AM

On July 8th 2018, the Indian market regulator SEBI (Securities & Exchange Board of India) has changed the procedure of transfer of physical shares or in exact terms, “Issued new regulations concerning to compulsory dematerialization for transfer of shares or other securities.” These guidelines with being effective immediately from December 05th 2018 which will require the dematerialization of shares in the Demat format before requesting a transfer.

Currently, one is permitted to send physical certificates to get the new certificates issued under one’s name. And the dematerialization of physical certificates after transfer will only work till December 4th, 2018. This dematerialization after the transfer of shares in physical form only processes on the basis of the Transfer Deed (TD). So, if you are in possession of physical shares then demat transfer request in necessary otherwise the physical request will be rejected right away.

The first thing you need to remember is that this new regulation of dematerialization of shares is applicable to the shares of publicly listed companies only. Those companies who are listed on a recognized stock exchange, this rule of transfer will only apply to them. But, to unlisted shares, the regulation is not applicable.

At least for now!

It may be made applicable later.

But, you don’t have to worry about anything. You need to remember that the shares which you are holding onto right now are not entirely worthless after this announcement. You have every right to hold your physical shares. Actually, there has been a lot of confusion around the latest announcement and holding of physical shares. It’s just you cannot sell them in physical form. So, if you have any, you must dematerialize them in order to sell them or transfer these to another Depositary Participatory (DP) account.

As of now, you can send a physical certificate with the Transfer Deed (TD) and the registrar will send you out the fresh certificates with your name as the registered owner on the certificate itself.

But, after 5th Dec 2018, you gonna need to dematerialize them first. So, make sure that the name on the share certificate and the demat account matches perfectly. On the bright side, one can sell more than 500 shares after 5th Dec 2018 which is limited to 500 physical shares now. Once the transfer will carry out through the demat form then this won’t be compulsory anymore.

Still, there is no clear info about the dematerialization of non-listed shares to make a transfer. However, it is planned to extend this rule to unlisted shares as well.

Hope, this info will help you in getting what you need. Nevertheless, if you have any query or would like to add something then doesn’t forget to mention in the comment section below. We will be happy to answer all your questions.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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