Secretarial Practice · Ch 9 — Depository System
Dematerialisation and Rematerialisation
Dematerialisation and Rematerialisation
The depository system rests on converting paper securities into electronic form, and — if an investor ever wants it — converting them back. These two opposite processes are called dematerialisation and rematerialisation.
Dematerialisation. Dematerialisation is the process of converting physical share/security certificates held by an investor into an equivalent number of securities in electronic (book-entry) form, credited to the investor's demat account. The broad procedure is:
- The investor who wants existing physical certificates converted fills a Dematerialisation Request Form (DRF) and submits it, along with the physical certificates, to their Depository Participant (DP).
- The DP verifies the documents, defaces the certificates (to prevent their re-use) and forwards the DRF electronically, along with the physical certificates, to the depository and, through it, to the company (or its Registrar and Transfer Agent, RTA).
- The company/RTA verifies the certificates, confirms dematerialisation to the depository, and cancels the certificates in its own records.
- The depository then instructs the DP to credit the corresponding number of securities, in electronic form, to the investor's demat account.
Once dematerialised, the investor's holding exists purely as an electronic entry — there is no certificate left to lose, forge or physically transfer.
Rematerialisation. Rematerialisation is the exact reverse process: converting an investor's electronic (demat) holding back into physical share certificates. An investor who, for some reason, wants physical certificates again submits a Rematerialisation Request Form (RRF) to their DP; the DP forwards it to the depository, which instructs the company/RTA to print and issue fresh physical certificates in the investor's name, while the depository simultaneously debits (removes) the equivalent electronic holding from the investor's demat account.
The key distinction. Both processes move the same securities between two forms of holding, but in opposite directions:
| Basis | Dematerialisation | Rematerialisation |
|---|---|---|
| Meaning | Converts physical certificates into electronic form | Converts electronic holdings into physical certificates |
| Direction | Paper → electronic | Electronic → paper |
| Form used | Dematerialisation Request Form (DRF) | Rematerialisation Request Form (RRF) |
| Effect on demat account | Securities are credited to the demat account | Securities are debited from the demat account |
The process of converting an investor's physical share/security certificates into electronic (book-entry) form, credited to their demat account, via a Dematerialisation Request Form (DRF) submitte …
The reverse process — converting an investor's electronic (demat) holding back into physical share certificates, via a Rematerialisation Request Form (RRF); the electronic holding is debited and f …