According to the instructions of SEBI (Securities and Exchange Board of India) under “Nomination for Eligible Trading and Demat Accounts”, all Demat account holders are expected to update their nomination details. They can choose to either update the required information of nominees or opt out of the nomination facility.
A nominee can be any person, including an individual's father, mother, spouse, siblings, children, or someone else entirely. The nominee becomes the legal heir of an individual’s investments in case of the unfortunate demise of the person.
The following sections will detail everything about Demat accounts and how to check nominees in a Demat account.
What is a Demat account?
The term ‘Demat account’ stands for a dematerialised account, a digital account that enables investors to hold shares and other securities in the electronic medium. Nowadays, having a Demat account has been made mandatory for investors.
A Demat account helps an investor keep track of all his/her investments that he/she has ever made. It holds all securities owned by an individual, including shares, bonds, mutual funds, and exchange-traded funds (ETFs), all in a single place. This facilitates easy trading in the online medium for users.
Since its introduction in India, Demat accounts have enabled better and more efficient governance. It has reduced the risks of storage, damage, theft, and other malpractices associated with the physical storage of securities. When you open an online demat account with Bajaj Financial Securities Ltd., you also get a free subscription for the first year.
Online process of adding nominees to your Demat account
Appointing a nominee protects the investor’s holdings from legal complications in case of his/her unfortunate demise. However, one must know how to add a nominee to a Demat account. One should follow these steps to add a nominee:
- Investors have to log in to their Demat accounts
- Then, one needs to go to “Profile Segment” and click on “My Nominees”
- He or she will get two options to choose from- “Add Nominee” or “Opt-out”
- Now, the investor has to fill in the requisite details and then upload an ID proof for his/her nominee
- The person will have to enter his/her nominee’s share in percentage
- Finally, the investor will have to e-sign the document using Aadhaar OTP, and his/her nominee details will be subsequently processed
How many nominees can be appointed?
A nominee can be anyone, including a family member like one’s father, mother, siblings, spouse, children, or any other individual. A minor can also be added as a nominee (guardian details of the minor is required). However, non-individuals such as corporations, Hindu Undivided Families, or societies cannot be appointed as a nominee.
Individuals can appoint up to three nominees to their Demat account by assigning a percentage to each of these nominees. For instance, if an investor has appointed three nominees, then he or she can assign 50% to the first nominee and 25% to the other two nominees.
Benefits of appointing a nominee
Having a nominee for one’s Demat account can be highly beneficial when planning for the long term. It enables the seamless transfer of one’s assets to his/her legal heir in the case of the person’s unfortunate demise. Here are some of the benefits of nomination in Demat accounts:
- In case of any unforeseen mishaps to an account holder, the presence of a nominee helps in the smooth transfer of securities of the Demat account holder.
- Having a Demat account nominee saves legal heirs from the long-drawn process of submitting numerous documents like a No Objection Certificate (NOC) and affidavits to the concerned authority.
- Not having a nominee may lead to a dispute amongst the heirs of any individual regarding the legal inheritance of assets kept in a Demat account.
- Adding a nominee also provides peace of mind since the individual is sure that his/her loved ones would be financially stable in case of his/her unfortunate demise.
Conclusion
When opening a Demat account, it is a good idea for an account holder to appoint a nominee who would become the legal heir of the account’s assets. Also, one must know how to check the nominee of a Demat account to verify whether he/she has already appointed a nominee and who the person nominated is.
Recently, SEBI extended the deadline for making nominations for all Demat account holders from 31st March 2023 to 30th September 2023. Failure to do so by this new deadline shall freeze such Demat accounts, preventing their account holders from making further investments.
