You must have heard of dematerialization of shares often, however, there is one more aspect which is parallel to dematerialization i.e. Rematerialization of Shares.
Rematerialization of Shares is opposite process of dematerialization. Conversion of shares held in electronic form into physical mode is known as Rematerialization of Shares.
To understand better the process of remat, it is necessary to understand some terminology as given below:
A depository is an organisation, which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered Depository Participant. It also provides services related to transactions in securities.
It acts just like banks, as bank keeps our money in one account, and we avail facility of Debit and Credit similarly depository keep the securities in demat form.
At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are registered with SEBI.
As per SEBI FAQ, A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services.
Public financial institutions, scheduled commercial banks, foreign banks operating in India with the approval of the Reserve Bank of India, state financial corporations, custodians, stock-brokers, clearing corporations /clearing houses, NBFCs and Registrar to an Issue or Share Transfer Agent complying with the requirements prescribed by SEBI can be registered as DP. Banking services can be availed through a branch whereas depository services can be availed through a DP.
Some of the popular Depository Participant in India are: Zerodha, Angel Broking , Edelweiss, SMC Global etc.
Registrar & Transfer Agent (RTA)
Registrar and Transfer Agents are entities registered with the Securities and Exchange Board of India (‘ SEBI’) under the Securities and Exchange Board of India (Registrars to an issue and Share Transfer Agents) Regulations, 1993 and are engaged in providing various ‘Registrar & Transfer Agent ( RTA) related Services’.
Some of the famous RTA are Karvy, Alankit, Skyline and Beetal etc.
What is the process of Remat?
If one wishes to get back his/her securities in the physical form he/she has to fill in the RRF (Remat Request Form) and request his/her DP for rematerialisation of the securities from his/her securities account. The process of rematerialisation is outlined below.
- Make a request for rematerialisation.
- Depository participant intimates depository regarding the request through the system.
- Depository confirms rematerialisation request to the registrar.
- Registrar updates accounts and prints certificates.
- Depository updates accounts and downloads details to depository participant.
- Registrar dispatches certificates to investor.
- Lock-in securities in a demat account can be rematerialized. If a BO has free as well as lock-in securities in his account for an ISIN then a separate RRF is to be submitted for rematerialization of free quantity and quantity under lock-in.
If lock-in balance is for different lock-in reasons or different lock-in expiry dates then a separate RRF is to be submitted for each lock-in reason / lock-in expiry date combination.
- In case of rematerialization the Issuer / RTA will issue new certificate(s). The new certificate/s may be issued under new folio number or in the existing folio, if investor already has one with the company.
- The Issuer or RTA, should be contacted in case of mistake in the name or any other details in the physical certificate issued.
- Remat does not amount to transfer and does not attract any stamp duty.
Difference between Rematerialization and Dematerialization
Below given difference is given at popular RTA Karvy:
Source: NSDL FAQ/CDSL FAQ/SEBI FAQ/Karvy