Question

Supriya’s grandmother who was unwell, called her and gave her a gift packet. Supriya opened the packet and saw many crumpled share certificates inside. Her grandmother told her that they had been left behind by her late grandfather. As no trading is now done in physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates. 

1. Identify and state the process. 

2. Also give two reasons to Supriya why dealing with shares in physical form had been stopped.

Answer 1

(1) Supriya should adopt the process of dematerialisation. Dematerialisation of shares means a process of converting the physical form of shares into electronic form. Under dematerialisation, an investor holds the various securities as an electronic balance in an account. Dematerialisation requires an investor to open an account with a depository participant. 

(2) Following are the reasons to Supriya why dealing with shares in physical form had been stopped:

• Transfer delays – Shares in physical form requires a good number of days for their transfer from one person to another. Transfer of dematerialised shares can be effected in much simpler and faster way. 
• Theft – Shares in physical form are not safe and are subject to evils of the fire, theft, pilferage, mutilation etc.