Supriya’s grandmother who was unwell called her and gave her a gift packet. Supriya opened the packet and saw many crumpled share certificate inside. Her grandmother told her that they had been left behind by her late grandmother. As no trading is now done in the physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates.

Identify and state the process.

Also give two reasons to Supriya why dealing with shares in physical form had been stopped.

Solution

Dematerialization: It is a process where securities held by the investors in physical form are cancelled and the investors give an electronic entry or number so that she/ he holds it as an electronic balance in an account.
Problems with dealing in physical form: (a) Theft; (b) Transfer delays.