A physical share certificate is a paper document that serves as proof of ownership of shares in a company. It includes details such as the shareholder’s name, the company’s name, the number of shares owned, and the certificate number. Traditionally, investors received these certificates after buying shares, and any transfer of ownership required signing and submitting physical documents to the company’s registrar. This process was often time-consuming, prone to loss or forgery, and involved manual recordkeeping.

An electronic share certificate, often called a dematerialised or “demat” share, represents the same ownership rights but in digital form. Instead of holding a paper certificate, an investor’s shares are recorded electronically in a demat account maintained by a depository participant. This system eliminates the need for physical handling and greatly simplifies buying, selling, or transferring shares.

The main differences lie in security, convenience, and efficiency. Electronic certificates reduce risks of theft, damage, and forgery, while enabling faster settlement of trades. Physical certificates, on the other hand, require verification and manual processing for every transaction. Most modern stock markets have moved entirely to electronic systems, making trading smoother and more transparent. In essence, electronic share certificates represent the modernisation of ownership records, providing investors with a safer and more convenient alternative to traditional paper-based documentation.