Discover how dematerialisation and rematerialisation work, and understand their unique features to manage your securities effectively.
Dematerialisation is a process for converting stock holdings from physical to electronic forms. In contrast, rematerialisation is the complete opposite. It allows you to convert electronic holdings to physical certificates. Dematerisaltion has facilitated a shift from paper-based shares. This has provided some flexibility and ease in the trading process.
If need be, you can also rematerialise your shares. Learning about how these processes differ may help you make informed decisions.
Dematerialisation allows you to benefit from holding securities in e-formats. Meanwhile, rematerialisation allows you to hold paper certificates without any annual maintenance fee.
Check the table below to learn how the two differ in characteristics:
Basis |
Dematerialisation |
Rematerialisation |
Meaning |
Storage of your securities in a digital form in a Demat account |
Conversion of shares from digital form into physical paper certificates |
Risks |
The risk of loss to misplacement, theft, or damage is nil |
The risk of misplacement, damage, theft, and forgery is high |
Costs |
Dematerialised securities are stored in a Demat account. This is managed by a Depository Participant (DP). It levies a nominal maintenance charge every year |
These do not require any account and attract no maintenance charges |
Impact on Trading |
You can easily trade your shares through a Demat Account |
SEBI does not allow you to trade physical shares unless you dematerialise them |
Authority |
DPs manage your Demat account and your digital securities |
The company with which you invest helps maintain your securities |
Process |
It is a relatively simple, easy process |
It may be a lengthy process |
Dematerialisation allows the conversion of your physical securities into a digital format. In your demat account, you can store these securities in an electronic form. This eliminates the risk of fraud, forgery, or displacement.
To initiate the conversion process, open a Demat account with a brokerage firm. Then, submit the Dematerialisation Request Form (DRF) to a Depository Participant (DP). There are two depositories in India that store your dematerialised shares. These are the National Securities Depository Limited and Central Depository Services Limited.
Rematerialisation is the process of converting your digitally stored securities into physical forms. Opt for this process if you want to:
Avoid paying maintenance charges for a Demat account
You do not plan to trade shares for any reason
Approach your DP and furnish a Remat Request Form (RRF) to convert the securities.
Here are some steps you may have to follow to dematerialise your securities:
Approach a DP who offers Demat services
Fill out the DRF and submit it to the DP along with your share certificates
Write ‘Surrendered for Dematerialisation’ on each of the certificates
The DP will submit the request with the certificates to depositories, registrars, and transfer agents
Upon approval, the electronic shares are credited to your Demat account
In this case, the physical copies will be destroyed. Overall, the process may take 15 to 30 days.
The rematerialisation process usually involves the following steps:
Submit the RRF form to your DP
The DP will share the form with the depository, which will forward it to the registrar of the firm
You will receive the acknowledgement slip and the Rematerialisation Request Number (RRN)
The registrar will print the certificates and share them with you after sharing the status with your DP
The entire rematerialisation process could take up to 30 days.
Frequently Asked Questions
What is Demat vs Remat?
Demat and Remat stand for dematerialisation and rematerialisation of securities. Dematerialisation is the conversion of your physical securities into electronic format. Rematerialisation allows you to convert dematerialised securities to physical certificates.
Which is better, dematerialisation or rematerialisation?
Dematerialisation is the conversion of securities into a digital form. It reduces the risk associated with holding securities in physical form.
Can I trade physical shares?
According to SEBI, 99.9% of trading involves dematerialised securities. Thus, stock exchanges have a trading window for physical shares. Investors with shares mentioned in the compulsory Demat list have a one-time opportunity. They can sell these shares on stock exchanges. But the person buying these shares will need to Demat them to trade further.
Is rematerialisation of securities safe?
By rematerialisation, you convert your securities into physical form. As such, they may be exposed to the risk of theft, loss, or even forgery, making them less safe.
How can I request for rematerialisation of shares and securities?
You can convert physical securities into dematerialised forms by filling out and submitting the necessary request forms.
Can an NRI open a Demat account?
Yes, NRIs can open a Demat account in India and transfer physical shares into a Demat account.
What is the dematerialisation process?
Start by surrendering your physical certificates to your DP. The DP will let the depository know and submit these to the registrar of the issuing company. Once confirmed, the registrar undertakes various activities. These include dematerialisation of certificates, updating the account, and informing the depository.
What is the difference between dematerialisation and Demutualisation?
Dematerialisation is the process of converting physical shares into electronic formats. Demutualisation is a change in a firm’s ownership structure. It refers to a firm becoming a joint-stock company from a mutually owned business or cooperative.
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