How to get physical shares transferred and converted into demat

Moneylife Digital Team

28 January 2015 122  

Some people are holding shares not transferred in their name and don’t know how to
go about the transfer. Here is the procedure 

Corrected: As per Companies(Share Capital & Debentures) Rules, 2014, form 7B has
been replaced with form SH-4

UPDATE: Updated to include additional information provided by NSDL's Rajesh Doshi

on demat and bank names that provide franking facility

Several people are still left with shares in physical format. If these are
transferred in their name, they can continue to hold them and get them
dematerialised anytime they want to. What about those who are holding shares not
yet transferred in their names? One cannot sell these shares in physical forms
through stock exchanges, unless it is dematerialized. Several readers of Moneylife,
said they wanted to transfer physical shares jointly held. But they don’t know the
way out.  

Asking National Securities Depository Ltd (NSDL) is of no help. You will get a
standard reply like this: "Shareholders can dematerialise physical shares in their
own name. As such, transfers of physical shares are outside the purview of
depository system. There is also no trading in physical shares on the stock
exchanges and hence they can only be transferred in private deals. The recommended
course of action for investors holding physical shares is to dematerialise them.
Transfer of demat shares is also exempt from stamp duty." 

When we asked around, one member of Moneylife Foundation, Adil Daruwalla turned out
to be helpful on how get the franking done. We made our own enquiries. Here is the
procedure to transfer shares in physical form...

1. Send the share certificates along with the Share Transfer Deed (Form SH-4
available with stock exchange and brokers) duly filled in, executed and affixed
with appropriate share transfer stamps (available with authorised stamp vendors) at
0.25% of the market value (of the scrip) on the date of execution of the transfer
deed. Self certified copy of the PAN Card of the transferee(s) needs to be
submitted along with the instrument(s) of transfer and Stamp duty has to be
affixed.

Since 1 July 2002, Maharashtra government has banned sale and use of share transfer
stamps and mandated franking for such deeds. This facility was available at Bank of
India branch in BSE building. However, since December 2014, this facility has been
closed. Franking now happens at Town Hall General Stamp office only or other
central offices of collectorate of stamp fees within Maharashtra State, through
online registration or without online registration. The process can be found at
https://gras.mahakosh.gov.in. 

a. For paying the stamp duty without registration, you can use your online bank
account. Here are the steps involved in the process...

I. Select Pay without registration

II. Select Department as Inspector General of registration

III. In payment type, select Non Judicial Stamps

IV. Select the appropriate location in District

V. In office name, select General Stamp Office Mumbai

VI. In Scheme Name, select 'Purchase of franking code SOS Mumbai only'

VII. Select year as 2014 - 2015

VIII. In Article Code, select One time Adhoc

IX. Fill in the Amount 

X. Give Payee details

XI. Select e-payment/Bank

XII. Fill in image text

XIII. Click on Submit

XIV. Print GRN MTR6 Challan

Take this printout with your share transfer form to the office to get your stamp
fee franked on your transfer form.

i. If you do not have an online account, then

I. Print the GRN MTR6 Challan

II. Fill in your details and make the payment at your concerned bank's branch where
they accept payment for general stamp office with pay in slip etc.

III. Take the Form and the paid amount along with your transfer for franking.

In both cases, you will have to carry a letter addressed to the Additional
Collector (Stamps) in following format...

From:

_________

_________

_________

To

The Additional Collector Stamps

General Stamp Office Fort

Mumbai 23

Sub:- To Affix Special Adhesive Stamps on Share transfer form

Respected Sir,

With reference to the above mentioned subject, I have to state that I have paid
stamp duty of Rs.________________ as per MTR Challan No 6 (GRN No.
__________________________)

I hereby request you kind selves to kindly affix the requisite stamp duty on the
same.

Yours Faithfully

 
(Note: For Shares, stamp duty @ 0.25% of the market value or the consideration
amount (whichever is higher) should be affixed on the instrument of transfer.)

One can submit the letter, form and receipt to the General Stamp Office between a
specific time period. The franked documents can be collected between a specific
period the next day.

Rajesh R Doshi, Senior Executive Director of NSDL said, "My understanding is that
any bank, which offers franking facility for legal documents can also provide the
same for transfer deeds.  We use services of Kapol Cooperative Bank branches at
Kalbadevi and Fort for franking of legal documents. We have inquired with them and
they have confirmed that they would provide services of franking transfer deeds for
physical share transfer. Investors can approach them. There are other banks such as
Punjab and Maharashtra Co-operative (PMC) Bank and Citizen Co-operative Bank who
also provide facility for franking legal document however we have not used their
facility. Investors may inquire with them as well."

Here is the checklist for getting your deed franked

Covering letter to the Additional Collector Stamps. Two copies, one to submit and
second for receipt of the office and collection next day.

MTR 6 Challan with the GRN No if you have done e payment

Share transfer form 

Every share transfer form that has to be franked requires the above process.

After getting the deed franked, the investor can send the share certificates
(physical shares) and the share transfer deed (in form SH-4) duly filled in and
signed to the company or registrar.  It takes about 10 to 21 days to process the
transfer.

The statutory time limit fixed for completing a transfer is one month under the
Listing Agreement and two months under the Companies Act, 1956.

How to convert shares into demat form?

Dematerialisation (demat in short form) signifies conversion of a share certificate

from its present physical form to electronic form for the same number of holding.
Demat is optional and an investor can still hold shares in physical form. However,
she has to demat the shares if she wishes to sell the same through the stock
exchanges. Similarly, if an investor purchases shares, she will get delivery of the
shares in demat form.

 
There are two depositories, NSDL and Central Depository Services Ltd (CDSL), which
hold securities of an investor in electronic form, through depository participants
(DPs). DPs provide the link between an investor and company through the Depository.

Mr Doshi from NSDL said, physical shares can be dematerialized in the demat account
in the name(s) of share holders holding physical shares. In case, shares are held
jointly in physical form by investors, then the same can be dematerialized by
opening a demat account in joint names.

"However," he said, "as I understand,  investors prefer to make use of existing

demat account held in single name by first transferring physical shares held in
joint name into single name. Transferring physical shares requires payment of
transfer fees through franking of transfer deed documents, a service investors used
to avail from BOI Shareholding. Since BOI Shareholding has now stopped this
service, investors can use franking facility provided by some banks."

Here is how you can convert your physical shares into demat...

• Open a Beneficiary Account with a DP registered with SEBI and with any one of the
depositories, NSDL or CDSL.

• Submit the dematerialization request form (DRF) (in triplicate) to your DP duly
filled in and signed by all the shareholders, along with share certificate(s) and
necessary documents. Ensure that the names and order of names as per certificate(s)
matches with the names and order of the names as per the DP account.

• Obtain an acknowledgement from the DP.

• On receipt of DRF, the DP will generate a dematerialization request number (DRN),

which is electronically transmitted to the Company or STA through the concerned
Depository.

• Simultaneously, the DP will send the physical certificate(s) with the original
DRF to the Company or STA for verification and confirmation.

• The Company or STA, on receipt of DRF and share certificate(s) will process the
request. If the DRF is found to be in order, i.e. verified signature and
certificate(s), then it will electronically confirm the request.

• The DP on receipt of such confirmation, will credit the account with the shares
dematerialized.

• The DP will hold the shares in the dematerialised form thereafter on the
shareholders behalf and she will become beneficial owner of these dematerialised
shares.

Important points to note  

1) Validity of the executed instrument of transfer: 

for shares: - 60 days from the date of execution.

for debentures: - for an indefinite period

2) SEBI has notified vide its Circular No. MRD/DoP/Cir-05/2009 dated 20 May 2009
that it is mandatory for all transactions in the securities market including
transfer of shares in physical form of listed Companies to be accompanied with
copies of PAN card/s of all the transferees. Therefore attach self-certified copies
of PAN card/s of all the transferees along with the instrument of transfer  

3) Keep photocopies of certificates, instrument(s) of transfer and other documents

sent by post. In case of a loss in transit, they come handy. 

4) Always include your complete address along with pin code while filling in the
instrument of transfer/opening an account with a depository participant. 

5) Do not send share certificates / DRF documents to the Company / Registrars

directly.

NOTE:

Those seeking help in transfer/coversion of physical shares may check website of

Share Samadhan https://sharesamadhan.com/contact-us

However, kindly understand, your engagement with Share Samadhan will be strictly on
a professional basis and involve payment of a fee to Share Samadhan. Moneylife will
have NOTHING to do with such a client-advisor relationship and you would agree to
keep Moneylife out of such arrangement/s and or consequences arising from it.

  

collectorate of stamp fees

Warm Regards,
 
Suresh Kumar Sharma