CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited) are the two main depositories in India. They were established to facilitate the electronic holding and transfer of securities, which replaced the physical certificates that were traditionally used in the Indian stock market.

• CDSL was established in 1999, primarily promoted by the Bombay Stock Exchange (BSE).
  
  
• NSDL was the first depository in India, established in 1996, and was promoted by the National Stock Exchange (NSE) along with other prominent financial institutions.

1. Role of CDSL and NSDL:

The primary role of CDSL and NSDL is to hold securities like shares, bonds, and mutual funds in electronic form. They facilitate the following:

• Dematerialization: Conversion of physical certificates into electronic form.
  
  
• Rematerialization: Conversion of electronic holdings back into physical form.
  
  
• Transfer and Settlement: Seamless transfer of securities from one account to another.
  
  
• Pledge and Hypothecation: Holding securities as collateral for loans.

2. Online Share Transfer of Unlisted Shares via CDSL and NSDL

Unlisted shares are shares of a company that are not listed on any recognized stock exchange. While CDSL and NSDL primarily deal with listed securities, they also facilitate the transfer of unlisted shares.

Steps to Transfer Unlisted Shares Online:

1. Dematerialization: First, you must dematerialize the unlisted shares if they are in physical form. This can be done by submitting a Demat Request Form (DRF) to your Depository Participant (DP) along with the physical share certificates.

2. Online Transfer Request:

   • Log in to your demat account, which is linked to either CDSL or NSDL.
   • Select the option to transfer shares.
   • Enter the details of the recipient's demat account, which must also be with a DP registered with CDSL or NSDL.
   • Mention the International Securities Identification Number (ISIN) of the unlisted shares.
   • Initiate the transfer and authorize it using the One Time Password (OTP) sent to your registered mobile number.

3. Execution of Transfer: Once the request is processed, the shares are transferred electronically from your demat account to the recipient’s demat account.
   
   For more detail, Please visit this link.

3. Stamp Duty in the Unlisted Market

Stamp Duty is a tax that is levied by the government on the transfer of securities. In the context of unlisted shares, stamp duty is applicable when shares are transferred from one party to another.

Why is Stamp Duty Charged?

• It acts as a revenue source for the government.
  
  
• It provides legal evidence of the transaction.

How is Stamp Duty Calculated?

• The stamp duty on the transfer of unlisted shares is calculated based on the consideration amount (the price at which the shares are being transferred).
  
  
• The rate of stamp duty for the transfer of unlisted shares is typically 0.015% of the consideration amount.

Example: If 10,000 unlisted shares are transferred at a price of ₹50 per share, the total consideration amount is ₹5,00,000.

The stamp duty would be: ₹75

Stamp Duty Calculator

4. Transfer of Unlisted Shares via DIS (Delivery Instruction Slip)

If online transfer through CDSL or NSDL is not possible, the shares can be transferred using a Delivery Instruction Slip (DIS).

Steps to Transfer Unlisted Shares via DIS:

1. Obtain DIS: The DIS booklet is provided by your Depository Participant (DP). It is a physical slip where details of the transfer are manually filled out.

2. Fill in the Details:

   • ISIN: Mention the ISIN of the unlisted shares to be transferred.
   • DP ID and Client ID: These are the account details of the transferee.
   • Quantity: Number of shares to be transferred.
   • Consideration Amount: If applicable, mention the value at which the shares are being transferred.
   • Execution Date: Specify the date on which the transfer should be executed.

3. Submit to DP: The filled DIS must be submitted to your DP, who will process the transfer on your behalf.

4. Verification and Processing: The DP will verify the details, and if everything is in order, the transfer will be processed. This process may take a few days, depending on the efficiency of the DP.

5. Acknowledgment: Once the transfer is executed, you will receive an acknowledgment from your DP, confirming the transfer of shares.

Conclusion

Understanding the roles of CDSL and NSDL, along with the processes for transferring unlisted shares, is crucial for investors dealing in the unlisted market. The introduction of online transfer facilities has made the process smoother, but traditional methods like DIS still hold importance, especially when digital means are not feasible. Additionally, comprehending the implications of stamp duty helps in anticipating the costs associated with such transaction.