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NISM Series VI Depository Operations – Part 4: Dematerialisation, Rematerialisation, Transmission & Nomination

12 Apr 2026 • NISM-Series-6: Depository Operations Mock Tests

NISM Series VI Depository Operations – Part 4: Dematerialisation, Rematerialisation, Transmission & Nomination

Quick Summary: Part 4 of our NISM Series VI short notes covers the process of dematerialisation (demat) and rematerialisation (remat) of securities, ISIN structure, the DRF procedure, transposition, transmission of securities, and nomination rules — all key exam topics for the NISM Series VI Depository Operations Certification.

What is Dematerialisation?

Dematerialisation is the process of converting physical share certificates or other securities into electronic form, held as book entries in a depository system. Once dematerialised, securities lose their physical identification features such as:

  • Share certificate number
  • Distinctive numbers
  • Folio numbers

The securities are then held in a fungible form — meaning all securities of the same class are identical and interchangeable.

What is an ISIN?

Every security that is dematerialised carries a unique ISIN (International Securities Identification Number).

  • ISIN is a 12-character identification code.
  • It is used in both domestic and international (cross-border) trades.
  • It is issued in accordance with the ISIN Standard (ISO 6166).

Structure of an ISIN:

  1. Prefix (2 characters) – Two-letter country code as per ISO 3166 (e.g., IN for India)
  2. Basic Number (9 characters) – Nine alphanumeric characters (letters and/or digits)
  3. Check Digit (1 character)

Only securities whose ISIN has been activated by the depository can be dematerialised in that depository's system.

Which Securities Can Be Dematerialised?

  • Shares, scrips, stocks, bonds, debentures, debenture stock, or other marketable securities of any incorporated company or body corporate (including underlying shares of ADRs and GDRs)
  • Units of mutual funds, rights under collective investment schemes, venture capital funds
  • Commercial paper (CP), Certificate of Deposit (CD), securitised debt, money market instruments
  • Government securities
  • Unlisted securities

Important: Physical securities can only be converted to book-entry form if the issuing company has entered into a demat agreement with the depository.

Prerequisites for Dematerialisation

  • The registered holder of the securities must make the request.
  • The ISIN of the securities must be activated by the depository.
  • The issuer company must have established connectivity with the depository.
  • The holder must have a beneficiary account in the same name as it appears on the security certificates.
  • The request must be made in the prescribed Dematerialisation Request Form (DRF).

Procedure for Dematerialisation (Step by Step)

  1. The DP provides the Dematerialisation Request Form (DRF) to the client.
  2. The client fills the DRF and submits it along with the physical security certificates to the DP.
  3. The DP checks the DRF for validity, completeness, and correctness.
    • If not in order: The DP returns the DRF and certificates to the client.
    • If in order: The DP accepts the DRF and issues an acknowledgement to the client.
  4. The DP enters the demat request in the DP system following the maker-checker concept. The system generates a Dematerialisation Request Number (DRN), which is noted on the DRF.
  5. The DP ensures that the certificates are defaced and mutilated before being sent to the Issuer / RT&A.
  6. The DP forwards the DRF and certificates to the Issuer or its RT&A for verification.
  7. The Issuer / RT&A verifies the documents for validity, completeness, and correctness.
    • If the DRF is in order, the Issuer / RT&A informs the depository and authorises creation of the credit balance in the client's account.
  8. The DP, upon confirmation of the credit entry, informs the client through a monthly transaction statement.

Key Deadline: An RT&A is required to confirm or reject a demat request within 15 days from the date of receipt of physical shares.

Rejection of a Demat Request

A demat request (DRF) can be rejected for various reasons, including:

  • Signature mismatch
  • Certificates reported stolen or fake
  • Court or statutory authority order prohibiting transfer
  • Duplicate certificates with same distinctive numbers already issued

Both NSDL and CDSL follow common rejection reason codes as per SEBI guidelines.

Any dispute regarding the title of securities (in physical form) after they have been dematerialised and credited must be settled among the DP, client, and Issuer / RT&A.

Transposition cum Dematerialisation

Transposition means changing the order of names of joint holders. If the names on physical certificates match the names in the demat account but appear in a different order, the client can get the securities dematerialised in the same account (without opening a new account) by submitting:

  • The security certificates
  • The Transposition Form
  • The DRF

Transmission cum Dematerialisation

In case of the death of one or more joint holders, the surviving joint holder(s) can get the deceased's name removed from the physical certificates and simultaneously dematerialise the securities by submitting:

  • Security certificates
  • Transmission Form
  • DRF

The DP must ensure that the demat account is in the name of the surviving holders only.

What is Rematerialisation?

Rematerialisation is the reverse of dematerialisation. It is the process of converting electronically held securities back into physical form (paper certificates).

Under this process:

  • The beneficial owner's demat account is debited for the securities to be rematerialised.
  • Physical certificates for the equivalent number of securities are issued.

A beneficial owner has the right to convert electronic holdings into physical certificates at any time. The request is made through the DP to the Issuer / RT&A using a Rematerialisation Request Form (RRF).

Destatementisation and Restatementisation (Mutual Fund Units)

Destatementisation: The process by which beneficial owners convert their mutual fund units held in physical form (Statement of Account / SoA) into electronic form and hold them in their demat account with CDSL.

Restatementisation: The reverse process — converting MF units held in demat form back into physical SoA / certificates, at the request of the beneficial owner. In case of Repurchase / Redemption, the AMC / RT&A pays the beneficial owner for the redeemed units.

Transmission of Securities

Transmission means the devolution of title to securities due to events such as:

  • Death of the account holder
  • Lunacy
  • Bankruptcy
  • Winding-up (in case of a company)

The person on whom the securities devolve must prove entitlement by submitting the appropriate documents to the DP to seek transmission.

Note: Securities that are encumbered (pledged or earmarked) will not be transferred out of the account. They will remain in the deceased BO's account until the encumbrance is removed or the obligation is fulfilled.

Transmission of Securities Held Singly (Without Nomination)

The legal heir(s) or legal representative(s) of the deceased account holder must make a request in the prescribed form to the DP to transmit the balances to their own account.

Transmission of Securities Held Jointly

In case of death of one of the joint holders:

  • The surviving client(s) must request the DP to transmit the balances to their account.
  • An application in the specified form must be submitted to the DP along with an original or notarised/attested copy of the death certificate.

Transmission of Securities Held by Karta of HUF

On the death of the Karta of a Hindu Undivided Family:

  • Surviving members can appoint the eldest surviving member as the new Karta.
  • A joint application in the specified format must be made to the DP through the new Karta.

If an HUF goes into partition, the securities are divided among all members in the manner specified by the applicant. Members must provide their individual beneficial owner account details for distribution.

Nomination for Securities

The Companies (Amendment) Act, 1999 introduced nomination provisions for shares, debentures, fixed deposits, etc.

Key Rules for Nomination in Demat Accounts:

  • Investors holding securities in demat form can nominate up to 3 nominees.
  • Nominees will be entitled to receive the securities on the death of the account holder.
  • Nomination can be availed at the time of account opening or later.
  • A separate prescribed form is used for nomination under the depository segment.
  • Nomination can be changed at any time by resubmitting the nomination details in the prescribed form.
  • Both resident Indians and Non-Resident Indians (NRIs) can avail this facility.

Quick Revision Points for NISM Series VI Exam

  • ISIN = 12-character code: 2-letter country code + 9 alphanumeric characters + 1 check digit
  • IN = India's country code in ISIN
  • RT&A must confirm/reject demat request within 15 days of receiving physical shares
  • Certificates must be defaced and mutilated before being sent to Issuer / RT&A
  • Remat = converting electronic holdings back to physical certificates using RRF
  • Transmission ≠ Transfer. Transmission happens due to death, lunacy, bankruptcy, etc.
  • Encumbered securities stay in the deceased's account until encumbrance is removed
  • Maximum 3 nominees allowed in demat account
  • Partnership firm cannot open a demat account
  • Transposition cum Demat: change order of joint holders' names + dematerialise simultaneously

Up Next: Part 5 – Trading, Settlement, Pledge & Hypothecation in Depository System

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