FAQs on transfer of securities in physical mode

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TaxClue Team
TaxClue Teamhttp://taxclue.in
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

1. What is the deadline for the transfer of securities in physical mode?

Ans: Prior to April 1, 2019 shares could be transferred in physical mode by way of a transfer deed / Form SH-4 or in dematerialized mode. With effect from April 01, 2019, all transfers shall happen only in dematerialized form.

2. Can shares be held in physical form after April 1, 2019?

Ans: Yes. Securities can continue to be held in physical form even after April 1, 2019.

3. Is holding shares in dematerialized form mandatory from April 01, 2019?

Ans: No. Shares can continue to be held in physical mode even after March 31, 2019.

4. How do I sell my physical shares from April 1, 2019?

Ans. Shares would need to be dematerialized whenever the shareholder wants to sell/transfer the shares. Till that time shareholders can continue to hold shares in physical mode.

5. Is there a deadline for opening a Demat account?

Ans: No. Demat accounts can be opened at any time and the timeline of April 01, 2019, is not applicable for the opening Demat accounts or getting the shares dematerialized.

6. Can the issuers/RTAs process/register transfer of securities in physical mode after April 1, 2019?

Ans: Transfer requests lodged with issuers / RTAs on or before March 31, 2019, shall continue to be processed beyond April 1, 2019. However, no fresh transfer requests in physical mode shall be accepted after April 1, 2019.

7. What is the recourse available to shareholders who have lodged transfer deeds prior to April 1, 2019, but the documents were returned citing objection/deficiency in documentation?

Ans: Shareholders who had lodged transfer requests before April 1, 2019, and whose requests were not processed due to objection/ rejected, may re-lodge the transfer requests after rectifying the deficiencies even after April 1, 2019.

8. Can transmission (i.e. transfer of title of shares by way of inheritance/succession) or transposition (i.e. re-arrangement / interchanging of the order of name of shareholders) in physical mode happen after April 1, 2019?

Ans: Yes. Transmission or transposition of securities held in physical mode can happen even after April 1, 2019.

9. Is this deadline on the transfer of securities in physical mode also applicable to debentures?

Ans: Yes. The deadline is applicable to all kinds of securities including debentures.

10. I hold shares in physical mode jointly with my wife. How can I transfer the shares to my wife’s name after April 01, 2019?

Ans: Up to April 01, 2019, shares held in physical mode could have been transferred by away of a transfer deed (Form SH-4). However, from April 01, 2019, shares can be transferred only in dematerialized form. Accordingly, in the given case, if the shares have to be transferred from joint name to wife’s name on or after April 01, 2019, the joint holders will have to open a Demat account in their joint names and the wife will have to open a separate Demat account in her name. The shares will then have to be dematerialized and thereafter transferred to the wife’s Demat account.

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