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Enhance due diligence for dematerialization of Physical share

08, Nov 2019
Enhance due diligence for dematerialization of Physical share

As part of strengthening the due diligence for Dematerialization of Physical Securities, the market regulator Securities and Exchange Board of India (SEBI) on November 5 asked listed companies to compile and submit data about shareholders holding shares in physical form to depositories by December 31, 2019


Companies or their RTA (Registrar & Transfer Agent) to provide a static database of their members to depositories:

All listed companies or their RTAs shall provide the following data (static database) of their members holding shares in a physical mode as on 31st March 2019 in a format which will be jointly decided by NSDL and CDSL

  • the name of shareholders
  • folio numbers
  • certificate numbers
  • distinctive numbers
  • PAN etc


The deadline set by SEBI to provide the above information is December 31, 2019


Due Diligence process to be adopted by Depositories   :

  • Depositories have to put in place systems to validate any dematerialization request received after December 31, 2019
  • After December 31st, 2019, each DRN request will be validated against the Demat account holders' names as available in the records of the depositories.


Depository system to generate flag/alert in case of any normal mismatch in Physical certificate:

  1. Any minor change in physical certificate name and demat account name  depository system will generate a flag
  2. the following additional documents  explaining the difference in name shall be sought, 
  • Copy of Aadhar Card
  • Copy of Passport
  • Copy of legally recognized marriage certificate
  • Copy of gazette notification regarding change in name


In case of complete mismatch the applicant to approach issuer company or RTA :

If there is a complete mismatch the applicant can approach the issuer company or the RTA for establishing his or her ownership.

This welcome move by SEBI will ensure full-proof ownership of shares to the legal owner of those physical shares.


Vikash Jain


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