KNOW HOW TO CLOSE YOUR DEMAT ACCOUNT!

Shares are kept in the dematerialized or electronic form in two depositors- Central Depository Services Limited and National Securities Depository Limited. Depositories receive shares though depository participants (DP) and not directly from investors. DPs are registered with the Securities and Exchange Board of India ( SEBI) and act as agents for depositories. To trade in shares. You need to have two accounts a trading account with a share brokers and a demat account with a DP. Keeping the trading and depository accounts with the same entity “ to avoid settlement hassles”. Your can change your DP if your current one is not prompt with settlement of shares you buy or sell. For that, you will have to open a new depository account and then close the old one.

STEPS TO CLOSE A DEPOSITORY ACCOUNT

1. APPLCATION : Submit it in a the prescribed format, annexure Q, to your DP. You can download the application form the DP website, for example http://www.nsdl.co.in/ . Submit all unused delivery instruction slips, which are issued y DPs and are used by investors for transferring the shares., with the request from. All the stocks would be transferred to your new depository account, which would be mentioned in the application form. A demat account can be closed only if there are not shares in it.

2. NEGATIVE CASH BALANCE: If your account has none, settle it before submitting the request for its closure. Negative cash balances arise on account of charges related to the account, like the annual maintenance charge. If you request closure without settling the negative balance, the DP can either reject your application or accept it with a waiver of the charges.

3. DEAD ISIN: The international Securities Identification Number is a n ID number that is unique for all the shares of a company. The account cannot be closed if it contains ISINs. There is no problem in transferring live ISINs, which belong to companies whose shares are being traded on stock exchanges, but what do you do with dead ISINs, which are of companies whose shares are no longer being traded? In this case, apply for dematerialization of the dead ISINs (conversion of electronic holdings into share certificates, the opposite of dematerialization) to your DP before placing your account closure request. The DP passes on the request to the concerned depository, which the intimates the registrar , which finally issues the share certificates to you. If you don’t get share certificates from the registrar and are unable to get your account closed due to pending remat requests, you should get it frozen.

4. HOW TO FREEZE AN ACCOUNT: Open a new account and request your current DP to transfer only dead ISINs in the old account. Apply for freezing, or suspension of this account in the prescribed format, annexure P. To revive the frozen account again apply to the old DP in annexure P.