Is there a restriction of dematerializing physical shares due to the new SEBI rule?
Note - SEBI has received representations from shareholders for extension of the date of compliance. In view of the same, the deadline has been extended and the aforesaid requirement of transfer of securities only in demat form shall now come into force from April 1, 2019.
Refer to this circular from SEBI.
SEBI has notified vide Notification No. SEBI/LAD-NRO/GN/2018/24 that except in case of transmission or transposition of securities, requests for effecting the transfer of securities shall not be processed unless the securities are held in the dematerialized form with a depository. Essentially, you will not be allowed to transfer your physical shares to another person after April 1, 2019.
However, there is no restriction of converting your physical shares to demat form. Click here to know the procedure for de-materialization.