Meaning
Conversion of electronic book entry securities back into physical paper certificates allows an owner to hold a tangible instrument outside the centralised system. The process of rematerialisation occurs when an investor withdraws holdings from a depository to obtain a certificate in their own name. This action reverses the trend toward digital holdings.
Physical Issuance
Delivery of a printed document signed by the company secretary or a registrar marks the completion of the request. During rematerialisation the electronic record at the central depository is debited and a new certificate is generated. This document provides the primary evidence of ownership for the holder.
System Exit
Removal of the assets from the high speed settlement environment changes how they can be traded. Once rematerialisation is finished the shares can no longer be sold through an electronic exchange without first being converted back into digital form. This step is often taken for long term holdings or for estate planning purposes.
Direct Possession
Control over the physical certificate gives the owner a sense of security and autonomy from financial intermediaries. Although rematerialisation increases the risk of loss through fire or theft, it eliminates the exposure to the insolvency of a custodian. The holder becomes the direct point of contact for the company regarding dividends and voting.
This choice is sometimes dictated by the specific requirements of a jurisdiction that does not fully recognise electronic titles.
