How to transfer shares from one demat account to another

Possessing a Demat account is mandatory to trade stocks, invest in shares, bonds, Exchange-Traded Funds, etc. This is because a Demat account acts as a bank account where investors store financial instruments like shares. However, transferring shares from one Demat account to another is much more intricate than transferring money between bank accounts.

Also, knowing the difference between the transfer and transmission of shares is imperative for picking the correct one. The following sections specify how to transfer shares from one Demat account to another and mention the differences between the transfer of shares and transmission of shares.

Why Should You Transfer Shares From One Demat Account to Another?

Investors transfer shares from one Demat account to another for various reasons. Transfer of shares allows an investor to consolidate shares from all Demat accounts. It simplifies account management and enables better monitoring. Managing multiple accounts can be burdensome, and transferring shares from one Demat account to another helps in reducing the stress substantially.

Moreover, investors can save money by reducing the annual maintenance fees for maintaining multiple accounts. Having all your shares in one Demat account also streamlines tax calculation. And the transfer of shares becomes imperative when an investor does not like the existing broker.

Generally, investors prefer transferring shares online because it is more convenient than the offline mode. However, some investors still prefer the offline mode because of the human touch.

How to Transfer Shares From One Demat Account to Another

Investors can transfer shares in two broad ways - online and offline. Generally, four parties are involved in the share transfer process - the investor, the current broker, the new broker, and the Depository. The Depository may be NSDL (National Securities Depository Limited) or CDSL (Central Depository Services Limited).

Here is a laydown of the online and offline process to transfer shares from one Demat account to another.

Transfer of Shares - The Offline Process

Investors who open Demat accounts get a DIS (Delivery Instruction Slip) besides the welcome kit. To transfer shares offline, one must fill out the DIS slip. The information contained in the DIS slip includes the 16-digit Beneficiary Owner (BO) ID, 12-digit ISIN (International Securities Identification Number), DP (Depository Participant) Name, and Inter Depository. If the transfer takes place in the same Depository, the investor needs to fill in a section called 'Off Market.'  

After filling up and signing the DIS, the investor needs to submit the slip/ form to their current broker. The current broker will verify the details entered and issue an acknowledgment receipt. The broker then forwards the investor's DIS form to the concerned Depository. The Depository transfers the requested shares from the investor's current broker to the new broker after carrying out the necessary checks.

It is good to know that investors may have to pay fees to their current broker to transfer shares to another account. However, if an investor plans to close their Demat account, they can close it for free by returning the unused DIS.  

Transfer of Shares - The Online Process

The online process of transferring shares from one Demat account to another is simpler than the offline mode. Here is what an investor must do to transfer shares seamlessly:

The investor must visit the NSDL or CDSL platform and register themselves. After registering successfully, the investor needs to select a facility called 'EASIEST.' The full form of EASIEST is Electronic Access to Securities Information and Execution of Secured Transactions.

Then, the investor must provide their details. After filling in the form, the investor needs to print the slip and give it to the Depository Participant. The DP verifies the form and forwards the information to the Depository. Finally, the Depository sends a confirmation email to the investor's registered email ID.

The investor can then log in to NSDL or CDSL and independently transfer shares from one Demat account to another. It is good to note that brokers usually take about three (3) to five (5) working days to transfer shares from one Demat account to another.

What is the Difference Between the Transfer of Shares and the Transmission of Shares?

Both transfer and transmission of shares mean a change in the shares' title and ownership. However, share transfer is voluntary, and a transferee or transferor initiates it. In contrast, the transmission of shares is operational and governed by law, and usually, the shareholder's legal receiver or representative initiates it.  

The transfer of shares is voluntary and not mandated by the law. It occurs when the transferee and transferor make a mutually acceptable decision about transferring shares. While transferee refers to the person receiving the shares, the transferor is the one transferring the shares. 

Transmission of shares occurs when the current shareholder dies or becomes insolvent or lunatic. It is operational by law. To facilitate the transmission of shares, the transferee has to provide proof of share entitlement. If the shareholder dies, the legal representative gets the shares. However, an official assignee receives the shares if the shareholder becomes insolvent.

Conclusion

This article contains detailed guidelines on transferring shares from one Demat account to another. It also mentions the primary difference between the transfer and transmission of shares. Transfer of shares enables an investor to save money and streamlines share investments.

FAQs

Why do people transfer shares from one Demat account to another?

Transfer of shares enables investors to consolidate their equity shares, bonds, mutual fund units, and the like into one account. This helps them to manage accounts better and reduces the stress of managing multiple accounts.

Transferring shares from one Demat account to another also helps investors to save money since they have to pay less account management or maintenance fees.

Will transferring shares from one Demat account to another help me to save money?

You can save money by transferring your shares from multiple Demat accounts to one account since you don't have to pay the account maintenance fee for multiple accounts.

Although some brokers waive the account maintenance fee for some customers, you still have to pay other fees, such as the account opening fee. So, transferring shares from multiple Demat accounts to one Demat account reduces your burden of fee payments.

How can I transfer shares from one Demat account to another through the offline mode?

To transfer shares from one Demat account to another offline, you must fill out the DIS form and submit it to your current broker. You can get the DIS form in your welcome kit; if not, you may approach your stock broker to provide you with the form.

After completing and submitting the DISform, your current broker will verify the form and forward it to the depository. The depository will transfer your shares to your new account.

How can I transfer shares from one Demat account to another through the online mode?

To transfer shares from one Demat account to another online, you must register on the CDSL or NSDL platform and select the 'EASIEST' facility. After this, you must fill out the transfer form, take a printout, and submit the same to your depository participant.

After your depository activates the transfer facility, you can transfer your shares from one Demat account to another.

Is the transfer of shares and transmission of shares different?

They are different. The transfer of shares is a voluntary process initiated by a transferor or transferee. But, the transmission of shares is governed by law and is initiated by the shareholder's legal receiver or representative.