How Dematerialization is Better Than Holding a Physical Certificate?

By Sneha B K
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    In demat mode one can hold securities conveniently in electronic form. Unlike physical certificates, there is no scope of loss, misplacement, theft or deterioration of securities in demat mode. ƒ

    In demat, correspondences like annual reports, notice for AGM etc. are despatched to the address of investor mentioned in their demat account.

    How Dematerialization is Better Than Holding a Physical Certificate?

    In case of change in your address, it is sufficient that you intimate the DP alone for all your investments in securities.

    In physical certificates, you have to intimate each company separately. ƒ

    Refunds, dividend, interest and redemption payment of debentures are automatically credited to the bank account mentioned in your demat account, where ever such facility is available.

    Otherwise, the payment instrument is despatched to your address mentioned in your demat account, with your bank number printed on the warrant to prevent misuse.

    Therefore, in case of change in your bank account, it is sufficient that you intimate the DP alone for all your investments in securities.

    Whereas if you hold physical certificates, you have to intimate each company separately. ƒ You can avail the nomination facility for your demat account with the DP.

    Whereas if you hold physical certificates, you have to avail nomination separately for each company. ƒ In the event of demise of the account holder, the securities held in the demat account are transmitted to the nominee by the DP.

    Whereas in the case of physical certificates, your nominee will have to correspond separately with each company for transmission of shares in his / her name. ƒ

    Non cash benefits like issue of bonus shares, stock splits, consolidation, mergers etc. are automatically credited to your 4 demat account.

    Whereas, in physical certificates there is a potential for loss in transit, delay in despatch etc. ƒ Unlike in physical certificates, stamp duty is not applicable for transfer of securities in demat mode.

    ƒDepositories offer alerts on debits or credits in your demat account, received due to IPO or other corporate actions through SMS. Therefore, monitoring your investments is easier in demat mode. ƒ

    Pledging your securities in demat form is simpler than pledging physical certificates. ƒ

    Unlike with physical certificates, you can trade even one single share in the stock exchange in demat mode as there is no problem of odd lots (shares in compulsory demat list).

    Source: SEBI
    GoodReturns.in 

    Read more about: demat account
    Story first published: Thursday, May 21, 2015, 15:35 [IST]
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