SEBI’s physical share rules: what holders of paper certificates must do now
Physical certificates can be held but not transferred. Folios missing PAN, KYC or nomination details are frozen until updated.
Two regulatory changes have quietly stranded a large volume of retail shareholding: the bar on transferring securities in physical form, and the freezing of folios that lack mandatory holder details.
You can hold, but you cannot sell
A physical certificate remains valid evidence of ownership. What you cannot do is transfer, gift or sell it until it has been dematerialised. In practical terms the holding is illiquid until you act.
Frozen folios
Registrars must freeze any physical folio missing PAN, complete KYC, nomination, bank details or a specimen signature. A frozen folio pays no dividend and permits no service request until every gap is closed.
What to do
- Retrieve the folio details and request a statement from the registrar.
- Reconcile name, address and signature against your current documents. Mismatches are the single most common blocker.
- File the change-of-particulars and nomination forms with the registrar.
- Submit a dematerialisation request through your depository participant with the original certificates.
Do not overlook corporate actions
Certificates issued decades ago may carry entitlements to bonus issues, splits, mergers or name changes since. Trace the corporate history before you demat — otherwise you may credit only a fraction of what you own.