INSUBCONTINENT EXCLUSIVE:
Markets regulator Sebi has set December 5 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
Here are some issues related to this rule:
Why has this rule come into effectIn the last few years, there have been frauds involving
physical shares, unclaimed dividend that accrued on such shares and also transfer of these shares
physical shares.
Will all physical shares of all listed companies become worthlessNo
Every physical share will retain its value
price in the market, but to realise that value one will have to demat those physical shares and then sell in the market to get the money in
Investors who do not want to sell their shares, can continue to hold them in physical form.
How to sell physical shares held by a deceased
personIf 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
In case the value of the shares is more than Rs 2 lakh, the legal heir needs to appoint a lawyer to get a probate from the court to
establish legal ownership, then change the name on the shares, demat those and sell in the market
Also, the current rules allow transfer of title of shares in case of inheritance and succession, and also for interchanging of the order of
the name of shareholders.
What happens in case one of the joint owners is deadThe existing joint owner can approach the company whose shares
he/she has with the death certificate of the deceased and change the ownership status to single from joint
After that he/she can demat the shares and sell in the market.
What challenges are companies, and registers transfer agents facingInvestors
holding physical shares are reluctant to follow the rules and formalities prescribed by the Companies Act and Sebi, to convert physical
