Q.Describe the procedure followed for the dematerialisation of securities.

Converting a paper certificate into an electronic entry follows a defined chain from the investor, through the DP and depository, to the company.

The procedure for dematerialising physical securities involves several parties acting in sequence:

1. Submission by the investor. The investor who wants to convert existing physical certificates into electronic form fills up a Dematerialisation Request Form (DRF) and submits it, together with the physical certificates, to their Depository Participant (DP).
2. Verification and defacement by the DP. The DP checks the DRF and certificates for correctness and completeness, defaces the physical certificates (to prevent their re-use), and generates an electronic dematerialisation request.
3. Forwarding to the depository, and to the company/RTA. The DP sends the request electronically to the depository, which in turn forwards it, along with the physical certificates, to the issuer company or its Registrar and Transfer Agent (RTA).
4. Verification and cancellation by the company/RTA. The RTA verifies the certificates against the company's own register of members, satisfies itself that they are genuine and match the request, confirms the dematerialisation to the depository, and cancels the certificates in its records so they can never be used again. …

Omitting the defacement/cancellation of the original certificates (a common error that leaves the impression that a certificate could later be re-used); leaving out the RTA's veri …