The below is a step-by-step guide to converting physical shares to Demat:

Holders of physical share certificates will quickly transform their shares to dematerialized form by taking the basic steps outlined below:

Step 1: The first step is to open a Demat Account.

Since you will need a Demat account to store your share/shares, this is the most essential and first step in converting share certificates into dematerialized form.

The measures to open a Demat Account are mentioned below.

1. Make contact with a SEBI-registered Depository Participant.

2. Complete an account registration form.

3. Send your KYC documents to your DP along with a completed application form.

4. With the DP/bank, sign an agreement as well as a charge plan. Both the account user and the DP will have their obligations and privileges outlined in this agreement.

5. You will be given a Demat account number, which you will use to begin trading in the financial exchanges using your Demat account.

Step 2: The process of converting actual shares to dematerialized shares.

1. Request a DRF Form, also known as a Dematerialization Request Form, from your DP.

2. Complete the DRF form and email it to your DP along with your share certificates ('Surrendered for Dematerialisation' must be written on each share certificate).

3. You can issue an electronic request within two to three weeks, subject to effective checking of the DRF form and validation of your share certificates, and your actual shares will be translated into dematerialized form and transferred to your Demat account.

Step 3: Get rid of the actual stock certificates.

It would be best if you now destroyed the physical share certificates, and you won't need to keep them any longer.

You can now quickly sell or move your shares in Demat form, which was previously impossible with physical share certificates.

The Drawbacks of Using Physical Share Certificates for Stock Trading

The below are some of the drawbacks of trading or owning stock with physical share certificates:

1. Physical share certificates are vulnerable to fraud and destruction, so they must be kept safe and protected under lock and key. Share certificates may also be damaged by normal wear and tear.
2. Transactions involving actual share certificates are time-consuming and cumbersome, requiring several steps to do, while transactions involving shares in dematerialized form can be completed in seconds.
3. Any transaction containing an actual share certificate is subject to stamp duty payments, while dematerialized share transactions are not subject to stamp duty payments, liabilities, or expenses.