What is Dematerialization?

In the bygone era, traders used to shout to buy and sell shares. What followed after was immense paperwork. This paperwork took a lot of time and patience. The advent of technology gave way to a much simpler process to avoid the task of paperwork. The process came to be known as dematerialization.

Dematerialization is when physical securities such as the share certificates and other documents are converted into an electronic form and held in a demat account.

Process of Dematerialization

This is how you can dematerialize your share certificates:

• Fill a request form for dematerialization from the Depository Participant.
• Submit the share certificates
• The certificates are then submitted to the registrar by the Depository Participant
• You might need to write ‘surrendered for demat’ on you certificated as asked by the DP.
• Once the certificates are dematerialized, the registrar updates the depository of the completion.

Different Between Dematerialization and Rematerialization

• Meaning

  Dematerialization is the process of converting all physical security documents into an electronic form.
  Rematerialization is when the converted electronic security documents are re-converted into physical documents.

• Level of Security

  The level of security in dematerialization is high as there is very less chance of online theft or forgery etc.
  Rematerialization involves physical paperwork, so there is a low rate of security and a high chance of forgery and damage to the documents.

• Mode of transaction

  Dematerialization involves an online transaction through an online demat account.
  Rematerialization transactions take place physically.

• Share Identification

  Dematerialized have a unique number called ISIN number for share identification.
  Rematerialized shares need a distinct number which is issued by the RTA.

• Cost of Maintenance

  Dematerialization involves maintenance charges of the demat account. The price varies from bank to bank.
  Rematerialization involves zero maintenance charges.

• Account Authority

  In dematerialization, the account authority lies with the depository participant.
  In Rematerialization the account authority for securities lies with the company.

Related Articles:

• Simple Steps to Convert Physical Shares to Demat
• What is a Demat Account & How to open a Demat Account
• Benefits of a Demat Account