Many people still have the physical shares of various companies. Are these shares still valuable, and if so, how to convert them into cash? In this article, you will find answers to all your questions regarding physical shares. Physical shares are in paper form, and were in use till 1997 when the Central Depositary Company was established. The Karachi Stock Exchange had already transitioned to electronic platform in 1991. The CDC announced that the shares will no longer be sold or purchased in physical form. Instead, the shares will have to be traded in electronic form only. This announcement was revolutionary as the trading in shares was changed entirely. The process made the sale and purchase of shares a much easier activity.
Why Demat the Physical Shares?
But how to trade the physical shares that many people have? According to PSX website, there are still around 200,000 investors who are holding paper shares and have not converted them into electronic form. In order to help the masses who are already unaware and cautious of any kind of trade in stock market, the CDC announced that anyone having physical share can sell convert these shares to electronic form and sell afterwards. As of 2023, the option is still available to anyone holding physical shares. It is important to note that as per the Securities and Exchange Commission of Pakistan’s Companies Act 2017, these physical shares will become obsolete after a certain time period which has not yet been disclosed. This makes it necessary to convert the physical shares into electronic format as early as possible. The process to convert the phyical shares into electronic from is known as dematerialisation or Demat.
How to Kick-start the Process?
In order to convert the paper shares into electronic format, all you have to do is to know the following details. Firstly, you should know the company of which you have shares. Secondly, you need to contact the Registrar of the company. The registrar’s name is available on the CDC website. If this looks difficult, you can drop a comment in the comment section below, and we will check out the registrar for you.
Transfer of Physical Shares of a Deceased Shareholder to Successor
There are certain instances where the shareholder has died and the heirs want to transfer the shares in their name. For this purpose, all you have to do is to get a hold of Successor Certificate. This certificate is nowadays issued by NADRA. This certificate will be required by the Registrar for conversion and transfer of shares.
Once you contact the registrar, the next step is to create a CDC Investor Account. Alternatively, you can create a Brokerage Account with a Broker and convert the physical shares into electronic form for sale. With CDC Investor Account, you can’t sell the shares but you can get the shares transferred in your name electronically. With Brokerage Account, you will be able to sell the shares. The former is easier and will not cost you, and is recommended to get hold of the shares in the beginning.
How to Sell Lost Shares?
The CDC has made the process very easy even when a person has lost the shares. The Shareholder has to approach the CDC with his CNIC, and the shares will be re-issued to the shareholder afterwards.
Right to Any unclaimed Dividends
The shareholder is also entitled to any uncollected Dividend to be re-issued to him against his shares. The Registrar is responsible to re-issue the uncollected Dividends upon request by the shareholder.
The purpose of this article by Pak Digest is to spread awareness amongst people that physical shares are not obsolete. They can still be converted into Cash by following a simple process. The process has been made very simple by the Central Depositary Company for the facilitation of the people. If there is any suggestion or questions regarding this article, please drop a comment in the comment section below.