An Overview of Dematerialization of Shares
In the early days, the shares we bought used to be in paper form- difficult to manage and process. Physical shares are prone to mishandling, loss, or theft. The concept of Dematerialization of shares was introduced to solve this fundamental problem. Dematerialization of Shares refers to a process of converting physical shares into their digital version. The process of shares’ digitization starts with the opening of a Demat account with a depository participant (DP) followed by the filing of the prescribed application. In the status quo, the Dematerialization of shares is mandatory for share trading.
What are the benefits of the Dematerialization of shares?
Share Dematerialization ensures an array of benefits for the shareholder. Some of its prominent advantages are as follow:
Since Dematerialization provides for the digital conversion of physical shares, the chances of mutilation, damage, theft, or loss would cease to exist. Security holders can use their Demat account online from anywhere to manage their digital form of securities. Ease of use with increased security provides a hassle-free experience to the security holders.
Physical shares are prone to misuse and damage. But Dematerialization has solved this fundamental problem by allowing shareholders to turn their physical certificates into their digitized version, which is high-secure-thanks to the end-to-end encryption of the Demat platform.
Availability of prompt transfer
Transferring physical share certificates to another party is a cumbersome and time-consuming process. However, through Dematerialization, shareholders can ensure the paperless transfer of their shares in no time.
What Do you understand by the term Depository?
A bank preserves your money, and similarly, a depository takes care of your financial assets via a depository participant against some charges. The depository is liable to keep your financial assets like stocks, bonds, mutual bonds, etc safe. Presently, our country has two main depositories namely- CSDL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). Take note that these bodies offer the facility of account opening via linked depository participants only.
What do you understand by Depository Participants?
Essentially, a depository participant is an avenue like a bank that takes care of incoming assets and performs transactions. In place of money, a depository participant deals with the management concerning securities and their transactions.
Overcome irrelevant documentation
In the early days, trading attracted massive paperwork that complicates the entire supply chain. With a depository participant, the undertaking relating to documentation and transactions is handled online.
Since DP processes are now executed online, they are safe and free from any potential mishaps including theft and loss.
Almost all DPs nowadays operate online with high-speed networks to ensure top-tier asset management and trading. This leads to no more lethargic trading scenerios that take hours and even days to complete.
Managing bulk investors become easier with depository participants that operate online.
How can Corpbiz help you with the Dematerialization of shares?
Dematerialization of shares is a simple yet delicate process that required undue attention from the shareholders. The novices or new users may find it complicated to deal with. We understand this fundamental problem and therefore provide top-tier and hassle-free service of Dematerialization of Shares. Here’s what we can offer in this regard.