Here is what you should check before applying for a demat account

Take broker's help and collect the complete list of documents that need to be submitted

After the Securities and Exchange Board of India (Sebi) mandated that no physical transfer of shares will be allowed from December 5 onward, Pavan Kumar approached his broker to dematerialise (demat) his stocks. The Registrar and Transfer Agent (RTA) rejected his application citing signature mismatch. “After the first rejection, they rejected my application four more times for signature mismatch. They first asked for additional identity documents, then affidavit in a particular format, and finally they asked me to get my signature verified by the branch manager of a nationalised bank,” says 69-year-old Kumar.

Kumar’s case is not one-off. Many individuals trying to demat their shares have to go back and forth with the RTA, which raises another query for the same issue after the shareholder has submitted additional documents for the previous one. “Based on my experience, I would say that 60-70 per cent of people will have to revisit them,” says Janvi Desai, vice president, IIFL Securities.

There are 73 RTAs and their procedures and document requirements vary, explains Rahul Jain, head of Edelweiss Personal Wealth Advisor. “It would benefit investors if the regulator were to standardise norms and paperwork for demat, as it has done for transfer of physical securities,” says Jain.

After Sebi set the December 5 deadline, many individuals are rushing to transfer their physical shares. These include parents giving away shares to their children, who can demat them later. “It also includes individuals who had purchased physical shares in the past and paid for them. But the transfer didn’t happen as the earlier shareholder didn’t provide the complete paperwork required,” says Venu Madhav, chief operating officer, Zerodha. Many are, therefore, facing issues even in transferring their physical shares. Sebi issued norms recently for a standardised procedure for transfer of securities in physical mode.

Brokers suggest that if RTAs raise more than one query on the same issue, the shareholder should approach his broker for guidance. “As a depository participant (DP), the broker will be able to guide the shareholder in the matter of proper documentation,” says Umesh Mehta, head of research, Samco Securities.

The most common issues that shareholders face are signature mismatch and change of address. Ask your broker about the entire procedure, and learn in advance the list of documents that will be required. These include a self-attested copy of permanent account number (PAN Card), identity and address proof, and an affidavit from the branch manager of a nationalised bank verifying the shareholder’s signature. “Every RTA, for example, has its own affidavit format that needs to be attached in case of a signature mismatch. Ask the DP to give you the right format of the affidavit in advance,” says Madhav.

In case of change of address, make sure you have the address proof of the new as well as the old house. If any of these documents of yours have any issues, the DP can suggest the alternatives that can be provided. There are two depositories in the country - National Securities Depository (NSDL) and Central Depository Services (India) or CDSL. Both depositories have listed on their websites the solutions to the issues that shareholders face.

In case you continue to face issues from the RTA and the broker says that he cannot guide or help you, go to Sebi’s online complain platform SCORES. “For faster resolution, the shareholder should complain about the DP (broker) as well as the RTA,” says Mehta.

Common problems and solutions

• Signature mismatch: Identity proof, PAN card, affidavit (RTA prescribed), signature verified by bank manager giving details of the account
• Address mismatch: Proof of residence for the new and old address, affidavit (RTA prescribed) PAN copy and identity proof
• Name mismatch: Affidavit (RTA prescribed), copy of PAN, copy of bank statement,  marriage certificate, gazette notification of name change, etc, needs to be submitted