DEMATERILIZATION OF SHARES

Dematerialization of securities means the conversion of physical securities into an electronic

format which is maintained by the dedicated depositories authorized by the Government of
India. In this context, securities include any kind of shares, scrips, stocks, bonds, debentures,
debenture stock or other marketable securities of a similar nature.

Public
companies

WHOM
DOES IT
APPLY TO

Excludes
Private
small
Companies
companies

PROCEDURE FOR DEMATERILIZATION OF SHARES (IN INDIA)

Open a Demat Account:

Step 1: Visit your preferred DP’s website and open a Demat and trading account quickly and
effortlessly.
Step 2: Click on the 'Open a Demat and trading account' link on their website.
Step 3: Fill in the application form.
Step 4: Upload scanned copies of all the necessary documents for Know Your Customer
(KYC).
Step 5: Sign the agreement with the DP along with the charges. This agreement contains the
duties and responsibilities of both the depository participant and the account holder.
Therefore, it is important to read them thoroughly before putting your signature.
Step 6: Once all the relevant documents are submitted, your application will be processed by
the DP.
Step 7: On successful approval of your Demat and trading account application, you will
receive a unique user ID and password to access your trading account along with a Demat
account number.

Raise a Request for Dematerialization of Shares:

Once you open a Demat account, you will have to put in a request to convert your physical
share certificates into the dematerialized format. You can follow the steps mentioned below to
raise a dematerialization request with your DP:
Step 1: Contact your DP for a Dematerialization Request Form (DRF).
Step 2: Fill up the DRF with all the required details and put your signature. Submit the duly
filled form along with your physical share certificates to your DP. It is important to mention
‘Surrendered for Dematerialization’ on each physical share certificate.
Step 3: Your DP will process your request after receiving the DRF along with the surrendered
physical share certificates.
Step 4: Further on, your DP would send the dematerialization request to the concerned
company’s appointed Registrar and Share Transfer Agent (RTA).
Step 5: Once the dematerialization request is approved, your physical share certificates get
destroyed, and your Demat account gets credited with the relevant number of shares.

DOCUMENTS REQUIRED

Holding the physical share certificates makes you the part-owner of the company that has
issued the shares in the first place. However, the process of converting a physical share
certificate to Demat requires some documents to be submitted for opening the Demat account
and then raising the request to dematerialize share certificates. Here are the documents you
would require to convert physical shares to Demat India:

 Proof of identity with a photo such as your Aadhaar card, PAN card, voter ID card,
driving licence, etc.
 Provide evidence of your residence, such as registered lease agreements, driver's licence,
passports, landline telephone bills, electricity bills, apartment maintenance bills (if
applicable), copy insurance, gas bills, etc.
 Your bank's passbook or account statement will serve as your proof of bank account
(must be no more than three months old).
 Your bank's passbook or account statement will serve as your proof of bank account
(must be no more than three months old).
 The original copy of the physical share certificates that you hold. The share certificates
must be in good condition with the information visible.
 Duly filled Dematerialization Request Form. You must ensure that you use separate forms
for shares of different companies. For example, if you have 5 shares of XYZ company
and 5 shares of PQR company, two separate forms will be filled for both the companies.
 Each paper share in the physical share certificates must be defaced by mentioning
‘Surrendered for Dematerialisation’. Remember to get an acknowledgement slip for the
surrendered shares.

Once you have submitted all the documents to convert physical shares to Demat, the physical
certificates become void and are destroyed by the respective companies and new electronic
shares are issued. These shares start to reflect in your Demat account, and you can trade by
selling or buying more of the shares at your convenience. If you have any copy of the
physical share certificates, you should remember that you can not quote it to mark your
ownership over the shares. Any trading practice involving the previously held physical share
certificates will be deemed illegal from hereon. The only claim you will have over the shares
will be through the transactions carried out in your Demat account. Hence, you must secure
your Demat account and remember your Demat account number.
 DEMATERILIZATION OF SHARES (USA)

DTCC's subsidiary, The Depository Trust Company (DTC), established in 1973, was
created to reduce costs and provide clearing and settlement efficiencies by immobilizing
securities and making "book-entry" changes to ownership of the securities.

DTC brings efficiency to the securities industry by retaining custody of more than 1.4 million
active securities issues valued at US$87.1 trillion, including securities issued in the US and
more than 131 countries and territories.

DRS

If an investor purchases securities and wants to hold them electronically in its own name
rather than in street name, the investor can do so through the direct registration system
(DRS). DRS allows an investor, as the owner of the security, to be the registered holder
directly on the issuer’s books and records, maintained by its transfer agent. Investors who use
direct registration receive a statement providing evidence of ownership instead of a stock
certificate. The issuer or its transfer agent sends all investor information, dividends, and
other corporate communications, including proxy materials, directly to the investor. With
DRS, the investor does not receive a physical certificate, instead receiving periodic
account statements (at least yearly) from the transfer agent or issuer evidencing
holdings. Dividend/interest payments, proxy materials, annual reports, etc., are mailed
from the issuer or its transfer agent directly to the investor DTC1.

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 Transfer
agents

WHOM
DOES IT
APPLY TO

Issuers
acting like DTC
transfer participants
agents

PRE-REQUISITES:

 Issuers that act as their own transfer agent, transfer agents and DTC participants can use
the service.
 Issuers and transfer agents must participate in DTC’s Fast Automated Securities Transfer
(FAST) Program (This is a program operated by DTC that facilitates the transfer of
eligible securities between transfer agents and broker-dealers. It allows for the rapid
transfer of securities without the need for physical certificates, streamlining the
process of transferring securities) as well as open a Limited Participant Account (LPA)
(An LPA is an account with DTC that allows transfer agents, issuers, and other
eligible parties to access DTC's services for electronic settlement and processing of
securities transactions), prerequisites to establish the DTC connectivity required for
DRS.
 Prior to offering DRS, a participant is required to participate in either a Surety or
Insurance program approved by DTC, or provide proof of similar coverage from an
approved surety/insurance provider2.

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PROCEDURE:

 Participants transmit registration instructions to the FAST agent or issuer through DTC by
using the PTS/PBS function NWT1 or by file transfer.
 When the instructions are received by the transfer agent, they establish a book entry
account for the investor on their records and mail a transaction advice to the investor.
 Through the DRS Profile system, an investor’s broker requests securities to be
transferred from their book entry DRS account at the transfer agent to the broker’s
account at DTC. The request to transfer the securities is entered via the Participant
Terminal System (PTS)/Participant Browser System (PBS) or via the depository's
file transfer protocol.
 The user enters proprietary information about the registered account, including the
customer's account number, account registration, share quantity, tax ID number, etc
 A valid surety or insurance number must be submitted with the instructions from the
initiating broker.
 The issuer/agent then validates the information and responds with a corresponding deliver
order through DRS.
 DEMATERILIZATION OF SHARES (Singapore)

The Central Depository (Pte) Limited (CDP) was established in 1987 and is a wholly
owned subsidiary of SGX (SINGAPORE EXCHANGE).

CDP provides integrated clearing, settlement and depository services for a wide range of
products in the Singapore Securities Market. This includes shares of listed companies, unit
trusts, bonds/notes etc3. CDP facilitates the electronic transfer and registration of securities,
allowing investors to hold and transfer their securities in electronic form. Therefore, CDP's
services encompass the dematerialization of shares, contributing to the modernization and
efficiency of the securities market in Singapore.

Above 18
years of age

WHOM
DOES IT
APPLY TO
Have bank
accounts in Not an
the banks undischarge
mentioned d bankrupt
below

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PROCEDURE:

1. Have a local Bank Account.

This allows you to receive your dividends and cash distributions via the Direct Crediting
Service (DCS). Participating banks with DCS are:
 Citibank NA (Citibank)
 DBS Bank Ltd (DBS/POSB)
 Malayan Banking Berhad (Maybank)
 Oversea-Chinese Banking Corporation Limited (OCBC)
 Standard Chartered Bank (SCB)
 The Hongkong and Shanghai Banking Corporation Limited (HSBC)
 United Overseas Bank Limited (UOB)

2. Prepare required Supporting Documents.

i) Primary Support Document -

For Singapore Citizens/PRs:
NRIC; or
Singapore Armed Forces ID; or
Singapore Police ID with Passport

For Malaysia Citizens:

Malaysia IC; or
Passport
Work Pass

For Other Nationalities:

Passport
Work Pass

ii) Secondary Support Document –

any one of the following will do:
 Bank statement from any MAS licensed banks, or
CPF statement, or
Latest Notice of Assessment for income tax from IRAS.

iii) Singapore Bank Account

iv) Tax Identification Number (TIN)

This is basically your IC number, for Singaporeans.
But, if you have a tax residency status outside Singapore, you will also need to
provide:
Country/Region of Tax Residency
Completed Form-W9 (For US citizens)

3. Fill up an application form on SGX website.

 DEMATERILIZATION OF SHARES (Hongkong)

In a circular dated 14th June 2023, HONG KONG SECURITIES CLEARING COMPANY
LIMITED (wholly owned subsidiary of the Hongkong exchanges (HKEX)), announced
Shares on the Stock Exchange of Hong Kong and Euronext Milan, the Company will undergo
a Dematerialization process with its existing Shares to be converted into electronic records.
Upon the effective of the Dematerialization, all of the Shares will be centralized and
registered with Monte Titoli under book-entry records4.

In accordance with the company announcement date 30 May 2023, the register of members
was closed from 16 June 2023 to 23 June 2023 to determine and ascertain shareholders that
have dematerialized their Shares. Hence, the latest time for the physical certificates deposit
with CCASS Depositary was on 15 Jun 2023, at 12:00pm and the input of withdrawal orders
will be ceased from 15 Jun 2023.

The key features of the Revised USM Model are:

 The Revised Model will operate under the new system to be introduced by HKEX to
replace CCASS (HKEX System), and not under CCASS;
 The current nominee structure will be retained, and therefore securities held with
intermediaries and through the HKEX System will remain registered in the name of
HKSCC-NOMS;
 Account types currently existing in CCASS will be retained in the HKEX System, with
the addition of a new “USS” account;
 Investors will be presented with the choice of holding securities in certificated form (but
for a limited period only) or in uncertificated form:
 uncertificated securities may be held through a CP account, an SSA or an IP account. In
each case, the securities will be registered in the name of HKSCC-NOMS and investors
will hold only a beneficial interest in them;
 uncertificated securities may be held in investors’ own names and managed through an
account opened with the issuer’s share registrar (USI account); or in the case of
institutional investors, uncertificated securities may be held in their own name and

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 managed through an account within the HKEX System (USS account) opened with a
clearing or custodian participant who will “sponsor” the account:
 The register of securities holders will continue to be kept and maintained only by the
issuer’s share registrar;
 Share registrars’ systems will be responsible for evidencing and effecting transfers of
legal title to securities without paper documents; and
 A new participant category – “registrar participants” – will be introduced into the HKEX
System in order to establish an electronic interface between HKSCC’s and share
registrars’ systems to facilitate communication on the movement of uncertificated
securities into/out of the HKEX System.

DEMATERILIZATION OF SHARES (Italy)

In Italy, Euronext Securities Milan performs the functions of central depository for
dematerialized financial instruments. The Offeror can decide whether to operate
independently at the central depository or use a third-party company specializing in this
activity (so-called Issuer Agent).

The modernisation process started by the FCA took another significant step a few months
later, with the adoption of legislative decree no. 213/1998 (Euro Decree). The Euro Decree
made mandatory, under certain circumstances, the dematerialisation of financial
instruments, and established that their issuance and circulation could only take place
through the central depository in the form of book entries. With legislative decree no.
27/2010 implementing the Shareholders' Rights Directive, all relevant provisions were
rearranged and concentrated in a single section of the FCA.

With the adoption of Regulation no. 909/2014 (CSDR) – implemented in Italy by legislative
decree no. 176/2016 – EU law has made a step forward in terms of the harmonisation of rules
on book-entry registration of transferable securities, to the extent it provides for the recording
in book-entry form of all transferable securities admitted to trading or traded on the trading
venues. In this respect, CSDR does not impose a specific method for the initial bookentry
recording, which should be able to take the form required by the law under which the
securities are issued, in line with private international law provisions. In compliance with and
pursuant to the CSDR requirements, with the resolution no. 21195 of 18 December 2019.
Consob (re-)authorised Monte Titoli (now known as Euronext Securities Milan) as “central
securities depository” within the meaning of CSDR5.

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