• Surrendering second holder's rights

My father (now 85 years old) had purchased shares of an IPO 20 years ago in the name of my son (year  of birth 1995) who was a minor at that time. On the share certificate (paper version) my son is the first share holder and my father is the second share holder; my son, who is now a major, is now receiving all the dividends. My son wants to sell these share right now.  But he can do so only after converting into demat form;otherwise he was told that he will be losing a lot of money if the paper form is sold. What is the best way to convert this share certificate into demat (electronic form)? If my father is ready to give up his rights as a second holder, what is the procedure? Or should we open a joint demat account of my son and father and then sell the shares? My son already has opened an individual  demat account.
Asked 9 months ago in Business Law from Mumbai, Maharashtra
1) open a joint demat account in name of son and father and sell the shares . 

2) you have been rightly advised to convert shares into demat form and then sell the shares 
Ajay Sethi
Advocate, Mumbai
23155 Answers
1216 Consultations
5.0 on 5.0
Since Tax issues are involved you better take help of a CA or a corporate counsel.
Devajyoti Barman
Advocate, Kolkata
5181 Answers
54 Consultations
4.9 on 5.0
Hi

1) Both your son and your father should sign the papers for converting physical shares to Demat Shares.

2) The steps involved are as follows and costs are bare minimal. 

2a. Applicable since your father does not have a demat account : Open an account with a depository participant (DP) preferably where your son already has a Demat Account. 
2b. Surrender physical certificates to DP
2c. DP intimates to the depository regarding the request
2d. DP submits the certificates to the registrar of the issuer company
2e.Registrar confirms the dematerialisation request from depository
2f. After dematerialising the certificates, registrar updates accounts
2g. Depository updates its accounts and informs the DP
2h.  DP updates the demat account of the investor

Hope this helps.
Rajgopalan Sripathi
Advocate, Hyderabad
868 Answers
43 Consultations
5.0 on 5.0
The shares need to be dematerialised, a process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in the investor's account with its DP.  A joint demat account has to be opened as the share certificate is jointly held in your father and son's name. A request should be placed for the dematerialisation of certificates by filling up a dematerialisation request form [DRF], which is available with the DP and submitting the same along with the physical certificates. The investor has to ensure that before the certificates are handed over to the DP for demat, they are defaced by marking "Surrendered for Dematerialisation" on the face of the certificates. 
Ashish Davessar
Advocate, Jaipur
18083 Answers
447 Consultations
5.0 on 5.0
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.
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.
An investor prefers 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.
 
Hope the above information enlightens all your doubts about the subject issue. 
T Kalaiselvan
Advocate, Vellore
13964 Answers
127 Consultations
5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Business Lawyers

T Kalaiselvan
Advocate, Vellore
13964 Answers
127 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23155 Answers
1216 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18083 Answers
447 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12084 Answers
228 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5181 Answers
54 Consultations
4.9 on 5.0
Nadeem Qureshi
Advocate, New Delhi
3523 Answers
129 Consultations
4.9 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
868 Answers
43 Consultations
5.0 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2731 Answers
41 Consultations
4.9 on 5.0
Lakshmi Kanth
Advocate, Hyderabad
223 Answers
2 Consultations
4.8 on 5.0
Shashidhar S. Sastry
Advocate, Bangalore
1233 Answers
59 Consultations
5.0 on 5.0