Dematerialisation Vs Rematerialisation: Our fathers and forefathers used to invest in companies, and in return, the companies provided them with a certificate of shares bought from the company.
These paper documents were often bundled with property papers and locked away in a small locker for eternity.
Today we buy and share stocks daily like nothing since all our shares are in dematerialised electric form and not on a piece of paper.
In the article, you will read about dematerialisation and rematerialisation.
You will also find out the process of dematerialisation and rematerialisation, and finally, about the difference between the two.
What is Dematerialisation?
Dematerialisation is converting share certificates on paper into electronic form, which can be stored in a free Demat account.
What is Rematerialisation?
The process of converting your electronic shares into physical form is called rematerialisation.
After rematerialisation, you are given a share certificate stating the number of shares you own and a special serial number that can be linked to you.
Process of Dematerialisation
Before converting your physical shares, you need to get yourself a Demat account.
If you don’t have one, you can open a free Demat account within minutes and fill out the Dematerialisation Request form to the Depository partner.
The Depository partner will then ask for documents such as Pan Card and Aadhar card for verification and the shares’ physical certificate.
The Depository partner will verify all the documents, and the process will commence, and you will get dematerialised shares in your Demat account.
Process of Rematerialisation
To get your shares materialised, you need to submit a form known as Rematerialisation Request Form to your Depository Partner.
The depository partner will forward your request for rematerialisation to the Depository, and then Depository will verify all the details.
After all the proceedings, you will receive your share certificate at your address. But during the process, your Demat account may be blocked till everything gets completed. It is a standard safety procedure.
Difference Between Dematerialisation and Rematerialisation
It is converting physical shares into electronic ones.
After dematerialisation, the electronic shares are kept in Demat accounts that are held by central and national depositories.
The dematerialised shares can be held, sent, sold and bought quickly since all transactions can take place electronically online in an instant.
Dematerialisation of shares is relatively easy to process and takes less time, around 2 to 3 weeks.
Dematerialised shares are kept safe in the Demat account held by depositories. But you must pay an annual maintenance charge to maintain the Demat accounts.
It is a process of converting electronic shares back into physical shares in certificate form.
Physical certificates of shares can be put anywhere since they are just paper documents.
They are more cumbersome, sharing physical shares is hard, and high risk is involved since they are to be sent or mailed via offline physical delivery, which takes more time.
Rematerialisation is a relatively complex process and takes upward of 30 days to convert electronic shares into physical form.
Rematerialized shares’ safety depends completely on you; if you put them in a safe bank locker, it is equally safe, but in a cupboard, maybe not. But it costs no money to safeguard them in the home locker.
Rematerializing might seem bizarre to many people, and they might start listing the advantages of electronic shares.
But Investing is a long-run game and if you have invested in a share for an extended period, say 20 and 30 years, or even more, the idea of rematerializing makes much more sense.
Saving annual maintenance charge on Demat account and urge to sell the shares in a falling market.
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