03-12-2018
Come Wednesday-5th Dec, one would not be able to transfer shares of listed companies if they are in physical form. SEBI has notified that 5th Dec as the deadline from when shares of listed companies could be transferred only in DEMAT form. Currently along with DEMAT shares, physical shares can also be transferred from the seller to the buyer.
Why this rule?
In the last few years there have been frauds involving physical shares and on unclaimed dividend that accrued on such shares and also in transfer of these shares. In case of DEMAT shares there is a bank account linked to the DEMAT account and this could help to trace the transactions and the money involved. That is why it is done.
Physical shares are worthless then ?
No. All physical shares will continue to have its value. But these shares will become illiquid as one cannot sell it unless they are Dematted. This has to be done before 5th Dec as of now. Those who want to continue to have the shares will get their dividends, bonus shares, right shares etc., But the Company will insist that the new shares allotted will have to be in DEMAT form only.
Deceased Shareholder-What to do?
In case of deceased shareholders, if the current value of the shares is up to Rs 2 Lakh, the legal heir can approach the company whose shares he/she has, along with the death certificate of the deceased, to change the name of the owner. He/she can DEMAT the shares and sell them in the market. If it is more than Rs 2 L value, the legal heirs need to appoint a lawyer to get a probate from the court to establish legal ownership, then change the name on the shares, DEMAT those shares and sell in the Share market. If one of the joint holders dies, the surviving owner can produce death certificate and take it in his/her name and then DEMAT the shares. So DEMAT all your physical shares and make them available for sale at any time and do it now, before 5th Dec.
Research Team
Goodwill
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