On 27th March, 2019, SEBI (Securities and Exchange Board of India) issued a release confirming that from April 1, 2019, the transfer of shares of listed companies can be done only in the dematerialised (demat) form. However, investors are not barred from holding shares in the physical form. The decision that the transfer of shares has to be compulsorily in demat form was taken in March 2018.

Shares in the demat form would help in maintaining a transparent record of shareholding at companies amid rising concerns over beneficial ownership of entities. According to SEBI, though move does not prohibit an investor from holding the shares in physical form even after April 1, 2019, “any investor who is desirous of transferring shares (which are held in physical form) after April 1, 2019 can do so only after the shares are dematerialised.”.

Transfer deeds once lodged prior to deadline and returned due to deficiency in the document may be re-lodged for transfer even after the April 1 deadline. The decision “is not applicable for demat of shares, transmission (i.e. transfer of title of shares by way of inheritance/ succession) and transposition (i.e. re-arrangement/ interchanging of the order of name of shareholders) cases,” the release said.