What Happens to Shares in a Demat Account When Closing It?

When dealing with the termination of a demat account, one common question that arises is, ‘What happens to the shares in that account, especially those with a blocked ISIN number?'

Understanding the Demat Account Closure Process

Aditya Birla, being a general rule, provides a straightforward procedure for transferring scrips from your previous account to a new one. This procedure involves generating a ticket/receipt from the previous broker and submitting it to the new broker. However, the specific process and implications of closing a demat account with blocked shares need to be carefully navigated. This article will provide a detailed overview of the steps involved and the legal and practical considerations.

General Transfer Procedure

The general procedure to transfer your schemes from a previous account to a new one is as follows:

Generate a Ticket/Receipt from the Previous Broker: Obtain a ticket or receipt for the scrips from your current broker. This document serves as proof of ownership and is essential for the transfer process. Submit to the New Broker: Take the ticket or receipt to the new broker to initiate the transfer process. Ensure All Holdings Are Transferred: Even if the shares are blocked, they should still be included in the transfer process as they are legally recognized as your assets.

While the shares in your demat account may be blocked by the Securities and Exchange Board of India (SEBI) due to various reasons, the principle that 'what you own is yours' generally applies.

ISIN Number and Blocked Shares

The ISIN (International Securities Identification Number) is a unique identifier assigned to the shares or other security by SEBI. When a security is blocked, it means that the transaction of these securities is temporarily halted. However, the owner retains the rights to these shares.

To rematerialize the shares with a blocked ISIN number, you need to comply with the following steps:

Contact the Previous Broker: Reach out to the broker who issued the blocked shares to request a de-block or deposition process. Obtain Documentation: This includes generating a receipt from your previous broker for the blocked shares. Submit Documentation to the New Broker: Provide the documents to the new broker to proceed with the transfer. Close the Demat Account: Once the necessary formalities are complete, you can proceed to close the demat account.

Conclusion

In conclusion, while the process of closing a demat account with blocked shares may seem challenging, it is manageable by following the appropriate procedures. It is crucial to ensure that all holdings are either sold or transferred to another demat account before closing the current one.

SEBI and other regulatory bodies have made provisions to facilitate smooth management of blocked shares and their eventual de-block. If in doubt, it is always advisable to seek professional advice to ensure compliance with all legal and regulatory requirements.