Demat form rejection may be an unpleasant experience, especially when there are so many new IPOs coming to market. Although rejections are uncommon, they might result in missed chances. Investors who are experiencing demat form rejections must act quickly to avoid further losses or damages.
However, before attempting to resolve the issue, it is necessary to understand why rejections arise in the first place. You may opt to apply with a new demat request form only after you have eliminated all of the mistakes in your previous application.
What is a demat request form?
When a security holder wants to convert their holding to dematerialized form, they fill out a demat request form, or DRF. According to SEBI requirements, an investor's physical share certificates must be dematerialized before they may be sold.
Because over 99 percent of shareholdings are demat, converting whatever physical certificates you may have into electronic credits in your demat account is a wise decision.
How to avoid demat account rejections?
- Make sure you have a tangible certificate to back up your DRF (Demat Request Form). Every individual DRF should ideally come with a certificate.
- Consult the RTA for confirmation of your ISIN number (transfer registrar). Your dematerialisation request form will very certainly be refused if there is a discrepancy. If it doesn't work, verify with the holding company to be sure no duplicate ISINs were issued.
- The majority of name mismatches arise when physical forms are passed down from generation to generation. Check the name on the certificate for any discrepancies, and if there are any, file a legal document affirming the new username on the certificates.
- Make sure that all of your KYC papers match the data on your form. Permanent address, father's name, first and surname name order, and other details are included.
- A typical reason for rejection is signatures that do not match the specimen signature. Ensure the signature on the demat form is correct. This is especially true if you are signing for the first time after a lengthy period of time. Any substantial signature inconsistencies will need to be approved by a magistrate. Because the process is laborious and time-consuming, it is best avoided.
How to submit a demat request form?
- The DRF, along with the physical certificates of ownership of the holdings, must be presented to your DP once completed.
- The DP double-checks all of your information and sends the demat request form to the relevant firm or its Registrar and Transfer (R&T) agency.
- Your DP will assign you a demat request number, or DRN, once it has confirmed your form. This DRN is required for any further communications on the problem and must be properly kept.
- A Registrar and Transfer Agent is an official who is responsible for keeping track of all shareowners and the transfer of the firm's shareholdings.
- When the issuer company's R&T agent receives the demat request form, they double-check it before sending it to the appropriate depository, whether CDSL or NSDL.
What happens when your demat request form is rejected?
Your DRF is inspected twice: first by the DP and again by the Registrar. As a result, it is likely to be rejected at one of these two levels. Let us discuss the reasons for rejection at each level and what you can do about it in each instance.
When the DP rejects the demat request form?
- You must fill out a new certificate and produce a new demat request form number for each physical certificate you own. You may just fill out a new form for each of your assets if your DP rejects your form for this reason.
- The name on your holding certificate and the name on your DP demat account must match. You have two alternatives in this situation. You can file a legal affidavit to correct the name issues, or just establish a new demat account with the same name as your holding certificate.
- The number of shares included on your demat request form must match the number of shares listed on your holding certificate. If there is a discrepancy, the DP will reject your application. To fix this, just resubmit the demat request form with the updated information.
When the registrar rejects the demat request form?
- Your DRF is likely to be denied if the number of shares indicated in the Demat Request Form is more than the number listed in the registrar's records. In this instance, you must re-fill the DRF and resend it to the registrar.
- Physical certificates are prone to forgery and manipulation, thus this is a typical issue. If the registrar rejects your application due to duplicate or fraudulent shares, you must contact the seller of the shares to settle the problem of share validity.
- The ISIN, or International Securities Identification Number, is a 12-digit identifier that identifies each security individually. Companies may issue numerous ISINs for various types of stock, such as fully paid and partially paid shares. In such a situation, it is typical for a stock owner to fill out the Demat Request Form with the incorrect ISIN. If this is the case, please re-enter the proper ISIN into the form.
- Your DRF is likely to be denied if the signature on the Dematerialization Request Form does not match those on the registrar's database. For a variety of reasons, signatures can alter. The most prevalent is connected to one's age. It is normal for people's signatures to alter as they become older. If the discrepancy in signatures is substantial enough to raise concern, you can have it verified in front of a magistrate and then send it to the registrar to have your Demat Request Form authenticated.
To sell your physical shares, you must first have them dematerialized. The procedure is straightforward and entails filling out a demat request form and submitting it to your DP, who then sends it to the issuer after proper verification.
The most typical problems encountered in this procedure are mistakes made when filling out the form, including your name or signature. The chances of your demat account being refused are quite minimal, especially if you apply online.
If you are applying for physical shares or have been rejected for one of the reasons listed above, be certain to resolve the issue as quickly as possible.