Question

Supriya's grandmother who was unwell, called her and gave her a gift packet. Supriya opened the packet and saw many crumped 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.

(a) Identify and state the process.

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

Answer 1

(a) De-materialization: It is a process where securities held by the investor in physical form are cancelled and the investor gives an electronic entry or number so that share can hold it as an electronic balance in an account.

(b) Problems with dealing in physical form:

(i) Theft.

(ii) Fake/forged transfers.

(iii) Transfer delays.

(iv) Paper work associated with shale certificates or debentures held in the physical form.