What Should You Do If Your Demat Request Form (DRF) Gets Rejected?

If an investor is holding physical share certificates, then as per the SEBI Regulations these shares have to be dematerialized before they can be sold. Since more than 99% of the shareholdings are in demat mode, it makes sense to convert your physical certificates, if any, into electronic credits in demat account.

This entails a small process. You need to submit the demat request form (DRF) along the physical copies of your share certificates to your depository participant (DP). As a first level check, DP will check and verify that the form is complete in all respects. Only after the verification is the DRF sent to the registrar of the company along with the necessary documents for dematerialization. Here are the conditions under which your DP can reject the DRF.

When the DP rejects the DRF

The DP normally verifies all technical issues before accepting the DRF for processing. Here are a few instances.

• You need to give a unique DRF for each certificate. In such cases, the investor will have to fill fresh and unique DRF for every share certificate.
• DP will reject if the names on the certificate and the DP account are not matching. In case of an initial/name issue, you can give a legal affidavit and it is accepted. But on occasions, the share certificate may have X as the first holder and Y as the second holder. However, in the DP account the holdings may be in reverse order. In such cases, it is easier to open a new demat account in the same format as the share certificates.
• The DP will also reject the DRF if the number of shares in the certificate and the DRF do not match or if the number of shares written in words and figures differ. In such cases, you need to fill up a new DRF rectifying the error and re-submit to the DP.
• Once DP has verified, it issues a demat request number (DRN). This DRN has to be saved as it is needed for subsequent follow-ups, complaints etc.

Why does the registrar reject the DRF and what is the remedy?

Once the DP has verified physical certificates and the DRF, a DRN will be issued and the certificates will be sent across to the registrar with the DRF. The registrar may reject the DRF on any of the following grounds. Here is what you need to do.

• The shares in the DRF may be more than the free holding in your name as per the records of the registrar. In that case, you will have to send the modified DRF, with the reduced number of shares directly to the registrar.
• The share certificates sent by you may be rejected by the registrar on the grounds of being duplicate or fake certificates. In such cases, the process is a lot more complex and the investor will have to get in touch with seller and get it rectified.
• There could be some technical mismatch between the name in the master list of the registrar and on the DRF. This could also lead to rejection and in such cases, the reason for the difference has to be explained and fresh DRF sent if required.
• Mismatch in signature is a major problem. There could be two reasons. Firstly, you may not have signed properly on the DRF due to which it does not tally with the master. In such cases, the only action point is to sign properly and re-submit the DRF. It gets a little more complex if your sign has actually changed. This is quite common and all signatures change over time. The problem arises only when the change is significant. In such cases, you must sign in front of the magistrate and submit an attested affidavit to the registrar. The registrar will execute the transfer accordingly.
• One common reason is that there is a stop issued on the share certificates on account of bank lien, statutory obligations or court order. In such cases, you need to get these issues sorted out and cleared and submit proof to the registrar to effect transfer.
• There are times the registrar may have paid double / excess dividend to the investor. In such cases the DRF is rejected and will be approved once the loss is made good.
• A common reason for rejection is when the ISIN mentioned in the DR does not match with the ISIN as per the master record with the RTA. This normally happens when the company has multiple ISINs for fully paid shares, partly paid shares etc.

The most common reason for the rejection of the DRF is technical and the rectification is quite simple. You can avoid a lot of these rejections by just ticking the right boxes and doing a double verification before submitting the shares for dematerialization.