Transfer of Shares

Transfer of shares means transferring the shares from one name to another. Generally, investors transfer the shares in the following conditions:

  • Need money for emergency purpose
  • Want to exit as he/she getting good appreciation of the investment
  • Before the IPO to prevent the investment to go in Lock-in for one year.
  • To get rid of investment as it is no longer a good company
  • To transfer the shares in the family name.

The share we want to transfer may be either in the Physical form or in the Demat form.

Physical Form

If Party “A” wants to transfer securities held in Physical form in the name of party “B”, first he/she has to convert the securities in DEMAT form as per new provisions of SEBI which are effective from 01.04.2019.

SEBI rules and Guidelines

The Board, on March 28, 2018, decided that except in case of transmission or transposition of securities, requests for effecting transfer of securities shall not be processed unless the securities are held in dematerialized form with a depository. This measure shall come into effect from April 01, 2019.

Subsequently, SEBI has received representations from shareholders for extension of the date of compliance. In view of the same, the following are hereby clarified:

  1. The above decision does not prohibit the investor from holding the shares in physical form; investor has the option of holding shares in physical form even after April 01, 2019.
  1. Any investor who is desirous of transferring shares (which are held in physical form) after April 01, 2019 can do so only after the shares are dematerialized.
  1. The transfer deed(s) once lodged prior to deadline and returned due to deficiency in the document may be re-lodged for transfer even after the deadline of April 01, 2019.

The above Board decision is not applicable for DMAT of shares, transmission (i.e. transfer of title of shares by way of inheritance / succession) and transposition (i.e. re-arrangement / interchanging of the order of name of shareholders) cases.”

So we can conclude that after 01.04.2019, if investor wants to transfer the Physical shares in the name of other investor, first need to convert them into DMAT form and then only can transfer.

This further means that going ahead from April 1, 2019, an investor will not be able to transfer the shares held in physical form using a transfer deed.

What is Demat Account?

DEMAT of shares means holding of security in the electronic form. DEMAT account is very similar to Bank account. There are only two depositories in India which are holding shares in Demat form.

  1. CDSL
  2. NSDL

CDSL is the listed company and NSDL is the unlisted company. All the brokers in India are either registered with CDSL or NSDL or both.

We at www.IEPFZone.com help our investors to open a DEMAT account as well.

If you are holding shares in Physical Form and want to convert in Demat then please go through the following procedure.

Process of Convert Physical Shares into DEMAT Form

1st Step: Open a DEMAT Account in the name of a person who is holding shares in physical form. We at IEPFZone.com help clients open one. For opening a DMAT Account, contact us.

2nd Step: Once you are ready with DEMAT Account, you need to download a DRF Form and fill it. The copy of the DRF form can be downloaded from CDSL DRF Form and NSDL DRF Form.

In case if you face any issue in filling the form you may contact Mr. Dinesh Gupta, 08010009625.

3rd Step: The two copies of duly filled DRF form along with Physical shares certificate will then be required to be sent to your broker. Usually, it takes 25-30 days for conversion, if all information is filled correctly.

Procedure of transferring shares held in Demat Form

Once shares are converted in DEMAT form, the shares can be transferred to any other person by duly filling only the DIS (delivery instruction slip) and submitting to your broker. The DIS copy if not available can be taken from broker through email. It is very similar to cheque book.

In the DIS slip, the investor just needs to fill the company name, company’s ISIN number, number of shares and share price.. After submitting the DIS slip to broker it takes less than 24 hrs to transfer the shares.