I have a demat account in which there are only 3 shares all of them either delisted or not traded in stock exchanges. Due to my old age, I want to close the demat account and avoid payment of AMC charges unnecessarily. But the DP says until and unless all the shares have been sold or transferred to some other account the account can not be closed. There may be many demat accounts in NSDL and CDSL like this (only increasing the total accounts with no purpose). Can not SEBI create a depository (like National Reconstruction and Asset Recovery for financial institutions) so that these dematted shares could be transferred without hazzle and close the demat accounts? I hope Zerodha can put up such a proposal to SEBI.
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Can you not transfer them to a random demat account?
Three options seem to be available, to close the demat account, where the shares are either delisted or not traded regularly.
Where the delisting is voluntary
Sell in the off-market:
If the company delists voluntarily, the account holder will get one year time to approach the RTA (Registered Transfer Agent) and tender the shares through an offline process. The company will have to honour the delisting price. If the company has been delisted for over a year, the shareholder can approach the company and enter into a private negotiation to sell the shares back to the promoters. This will be an off-market transaction and the price will be determined between the buyer and seller
Re-materialise:
The account holder also has the option to re-materialise the shares by converting them from electronic to paper form. For this, they have to approach their DP (Depository Participant) with a re-materialisation request for each of the company they hold a share of. The ICICIdirect spokesperson said this is a long drawn process and can take about 4-6 weeks, depending on the company
.
Where the delisting is involuntary:
Gift/transfer :
For delisted securites, the customer can transfer the balance to a different demat account using a delivery instruction slip.
The same procedure is to be followed for listed shares with thin trading volumes, making it difficult for the investor to sell them. “The investor will have to keep trying online to sell them. Alternatively, they can gift those shares or transfer the balance to another demat account.
PS:
I assume you are already aware of the above options, and probably just suggesting a hassle-free alternative, to transfer such delisted shares.
But, i wonder how this depository would work.
How do you expect to be compensated, when there is no demand for such shares either in the exchange or in the off-market, who is the buyer?
Do you expect the government to just take it off your hands and pay for it?
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No need to pay, just take it and hold it. Charity.
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If the ISIN is active, it’s always recommended to use the closure-cum-transfer process to move the holdings to any of your other demat accounts. Alternatively, or use the off-market transfer process to transfer the securities to a demat account held by a family member or friend.
If the ISIN is inactive, you may simply submit a closure request along with target Demat account CMR/CML copy(seal and signed). In this case, the demat account will be marked as To-Be-Closed, and no Annual Maintenance Charges (AMC) will be levied.
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Hi,
Thank you for the reply. All the three ISINs in the demat account are inactive for the last few years. I would be much obliged if you kindly explain the procedure for closure of the account.
You may submit the closure form along with a signed and sealed copy of the CMR/CML of your target Demat account to your Depository Participant (DP). They will process your closure request. If these ISINs are reactivated in the future, they will be reconsidered and transferred to your target Demat account accordingly.