What is Rematerialisation?

Let’s suppose you want to close your Demat account but want to hold your securities. In such a scenario, what would you do? Rematerialization is a process that allows investors to convert the securities held digitally back into physical certificates. This method allows investors to close their demat account and hold their securities in physical form.

In this blog, we will provide information about the rematerialization process and different reasons investors have to hold securities in physical form.

What is Rematerialisation?

Rematerialization is the process by which an investor can convert their securities held in electronic form back into physical certificates. In general, it is the opposite of the dematerialization process. However, rematerialization is less common today due to the benefits of holding securities in electronic form. Still, investors can hold the securities in physical form for various reasons, such as personal record-keeping, gifting, or other legal matters.

Process of Rematerialisation

The steps involved in the rematerialization process are mentioned below:

1. Getting RRF – Investors must obtain an RRF, or Rematerialization Request Form (RRF), from their depository participants to rematerialize their stocks kept in demat form. 

2. Fill and Submit the Form – Investors must fill out the form with the necessary information, including the client ID, DP ID, share quantity, and company details. Submit the form at the nearest branch of the DP and obtain the acknowledgment slip.

3. Processing – The DP communicates with the depository and forwards the RRF to the Issuer/R&T agent. 

4. Issuance of Certificate – After verifying the details, the RTA will process the request appropriately and issue physical share certificates. 

5. DP Confirmation – RTA notifies the depository of the acceptance of the RRF request, and the dematerialized shares are debited from the investor’s demat account.

6. Delivery of Certificate – Physical shares will be delivered to your registered address upon completing the process. 

Objective of Rematerialisation

The following are the primary reasons why investors convert their electronic securities into physical form: 

• Flexibility – The rematerialization allows investors to hold the securities in the form that best suits them. 

• Less Dependency on Technology – Many elderly investors continue to maintain physical documents of their assets because they want to avoid fraud, cyberattacks, and other related risks. 

• Savings – Investors may prefer to hold securities in physical form because they do not want to pay the fees associated with maintaining a demat account, transactional charges such as brokerages and taxes, etc.

• Long-Term Investors – There is a segment of investors who do not wish to trade their securities; hence, they would like to hold them in the physical form.

• Legacy – Gifting the shares to their family members as a legacy is also why people prefer to hold securities in physical form.

• Legal Requirement – Holding the securities in the physical form is required for legal processes. 

Advantages of Rematerialisation

The following are the main benefits of rematerializing securities: –

Physical Ownership – Physical shares give the investor the feeling of tangible asset and direct ownership.

No Demat Account charges– By holding securities in the physical form, an investor can avoid paying various fees related to a Demat account, such as annual maintenance charges.

Ease of Transfer – The physical share certificates can be quickly transferred from one family member to another.

Inactive Demat Accounts – Physical shares are suitable for investors who are not actively trading in the stock market. By holding shares in physical form, investors don’t have to worry about inactive demat accounts.

No Technical Risk – There will be no risk associated with technical failure in the online trading platform, cyber-attacks, frauds, etc., as securities are held in the physical form.

Duration of the Rematerialisation Process

The whole process of rematerialisation takes around 30 days to complete after submitting the request. The breakdown of the same is as follows-

1. Submission of Request – The investor first submits the Rematerialization Request Form (RRF) to their concerned DP, which will take approximately three working days to process the same.

2. Registrar – The Depository Participants send the request to the concerned registrar, which generally takes approximately seven working days.

3. Processing by RTA – Registrar and Transfer Agent takes around 15 to 20 days to issue physical shares, which is the most time-consuming process.

4. Dispatch of Certificate – After the final issuance of the certificate, the shares will be dispatched to the concerned investor. This delivery process will take around 7 days and depends on the postal services.

Hence, the total process will be completed in approximately 30 days; however, depending on other factors, it might take more than 30 days. Investors are advised to get in touch with their DPs if they don’t receive physical share certificates in 40 days. 

Conclusion

In conclusion, having securities in physical form does not require you to pay any annual maintenance costs. Physical shares give investors a sense of ownership and may be a requirement for legal processes. However, if you want to buy or sell securities, you must use a registered demat account for all your transactions. Demat account allows for faster and safer transaction processing. It is advised to hold shares and other marketable securities in electronic form. 

Frequently Asked Questions (FAQs)