How to Add Nominee in Demat Account

Adding a nominee to your demat account is an important step in ensuring that your investments are protected and passed on to your loved ones in case of any unforeseen circumstances. In this post, we’ll be discussing the step-by-step process of how to add nominee in demat account, including the necessary documents, fees, and timelines.

We’ll also cover some common mistakes to avoid during the nomination process. By the end of this post, you’ll have a clear understanding of how to add a nominee to your demat account and ensure that your investments are in safe hands.

Understanding the Concept of Nomination in Demat Account

Nomination in a Demat account is the process of assigning a person who will receive the securities in the account in the event of the account holder’s death. The Securities and Exchange Board of India (SEBI) has made it mandatory for all demat account holders to nominate someone to their account.

The nominee can be any person, including a family member or friend, and can receive the securities in the account without having to go through the probate process. Probate is a legal process that determines who will receive the assets of a deceased person.

Nomination is essential for demat account ownership, especially if the account holder owns securities or shares. In the absence of a nominee, the legal heirs of the deceased account holder will have to go through a lengthy and complicated legal process to claim the securities or shares.

It is important to note that the nominee does not become the owner of the securities or shares. They only receive the securities or shares as a trustee for the legal heirs of the deceased account holder. The nominee cannot sell or transfer securities or shares without the legal heirs’ consent.

To add a nominee to a demat account, the account holder needs to fill out a nomination form and submit it to the depository participant (DP). The DP is a financial institution that holds securities on behalf of the account holder. The nomination form should include the nominee’s name, address, and relationship with the account holder.

In conclusion, understanding the concept of nomination in a demat account is crucial for all demat account holders. It ensures that the securities or shares in the account are transferred to the designated person without any legal complications.

Importance of Adding a Nominee in Demat Account

When an investor opens a Demat account, it is important to add a nominee to the account. A nominee is a person who will receive the securities held in the Demat account in case of the investor’s death. Adding a nominee ensures that the investor’s investments are protected and transferred to the right person in the event of their demise.

There are several benefits of adding a nominee to a Demat account. Firstly, it simplifies the process of estate planning. By adding a nominee, investors can ensure that their investments are transferred to their loved ones without any legal hassles. This is especially important in cases where the investor has not made a will or trust.

Secondly, adding a nominee to a Demat account ensures that the investor’s investments are inherited by the right person. In the absence of a nominee, the legal heirs of the investor may have to go through a lengthy legal process to claim the investments. This can be time-consuming and expensive.

Thirdly, adding a nominee to a Demat account ensures that the investor’s investments are protected. In case of the investor’s death, the nominee can claim the securities held in the account without any delay. This ensures that the investments are not frozen or seized by the authorities.

In conclusion, adding a nominee to a Demat account is a crucial step in protecting an investor’s investments. It simplifies the process of estate planning, ensures that the investments are inherited by the right person, and protects the investments in case of the investor’s death.

Eligibility Criteria for Nominee

To add a nominee to a demat account, there are certain eligibility criteria that must be met. The following entities are eligible to be nominated:

• Individual: Any individual, including minors, can be nominated.
• Minor: A minor can be nominated, but a guardian must be appointed on behalf of the minor until they reach the age of majority.
• Guardian: A guardian can be appointed on behalf of a minor nominee.
• Resident Individual: Only resident individuals are eligible to be nominated.

It is important to note that a nominee cannot be a non-resident Indian (NRI) or a foreign national. Additionally, a nominee must be a person, not an organization or company.

To add a nominee to a demat account, the account holder must provide the necessary details of the nominee, including their name, address, and relationship with the account holder. The nominee must also provide their PAN (Permanent Account Number) details.

It is important to ensure that the details provided by the nominee are accurate and up-to-date. In case of any changes to the nominee’s details, the account holder must update the information in a timely manner.

By following the eligibility criteria and providing accurate information, account holders can ensure that their demat account nominee is authorized to manage their holdings in the event of their demise.

Steps to Add Nominee in Demat Account

Adding a nominee to a Demat account is an important step to ensure that the investments made by an individual are passed on to their chosen nominee in case of their unfortunate demise. Here are the steps to add a nominee in a Demat account:

1. Login to your Demat account using your DP ID, Client ID, and PAN details.
2. Navigate to the ‘My Profile’ or ‘Profile’ section of your Demat account.
3. Locate the ‘Nominee Details’ or ‘Nomination Details’ section and click on ‘Add Nominee’ or ‘Nominate’.
4. Fill in the required details of the nominee such as name, address, date of birth, and relationship with the account holder.
5. Upload the necessary documents such as identity proof and address proof of the nominee.
6. Review the details entered and click on ‘Submit’ to complete the process.
7. In case of electronic form submission, e-sign the declaration form using Aadhaar OTP.

It is important to note that the nominee added to a Demat account can be changed or removed at any time by the account holder. Additionally, if the account holder wishes to add multiple nominees, the process can be repeated for each nominee.

In case an individual wishes to add a nominee through the offline (physical form) nomination process, they can obtain the necessary forms from their Depository Participant (DP) and submit the filled-in forms along with the necessary documents.

Adding Multiple Nominees

A demat account holder can appoint up to three nominees for his/her demat account. In case of multiple nominees, the allocation of the shares can be assigned in percentages. For example, if there are three nominees, the allocation can be 50% for A, 25% for B, and 25% for C. If the account holder does not mention any explicit percentage, the allocation will be equal across all the nominees.

To add multiple nominees to a demat account, the account holder needs to download the demat nomination form from the DP website or the official website of NSDL or CDSL. The account holder then needs to fill in the details of all the nominees in the form. The details required in the form include the name, address, relationship with the account holder, and the percentage of shares to be allocated to each nominee.

It is important to note that the relationship of the nominee with the account holder needs to be mentioned in the form. The relationship can be spouse, child, parent, brother, sister, etc. If the relationship is not mentioned, the nomination may not be valid.

Once the form is filled, the account holder needs to submit it to the DP along with the necessary documents. The documents required include a copy of the PAN card, proof of address, and proof of identity of the nominees. The DP may also require additional documents, depending on their internal policies.

In conclusion, adding multiple nominees to a demat account is a simple process. The account holder needs to download the nomination form, fill in the details of all the nominees, and submit it to the DP along with the necessary documents. The allocation of shares can be assigned in percentages, and the relationship of the nominee with the account holder needs to be mentioned in the form.

Role of Depositories in Nomination Process

Depositories play a crucial role in the nomination process of demat accounts. In India, there are two depositories – National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). These depositories are responsible for maintaining records of dematerialized securities and facilitating the transfer of ownership of securities.

When an investor opens a demat account, he/she needs to nominate a person who will receive the securities in case of the investor’s death. The nomination process is facilitated by the depository. The investor needs to fill out a nomination form and submit it to the depository. The depository then records the nomination details in its database.

In case of the investor’s death, the nominee needs to submit a transmission form, a notarized death certificate of the deceased person, and the client master of the nominee’s demat account provided by his/her Depository Participant (DP). The DP is the intermediary between the investor and the depository. The depository then transfers the securities to the nominee’s demat account.

It is important to note that the nomination process is not mandatory, but it is highly recommended. In the absence of a nominee, the legal heirs of the deceased person will have to go through a lengthy legal process to claim the securities. Therefore, nominating a person ensures a smooth transfer of securities in case of the investor’s death.

Depositories also provide online facilities for adding, modifying, or deleting nominees. Investors can log in to their demat account and navigate to the ‘My nominees’ section to add or modify nominees. They need to fill out the nominee details and upload the ID proof of the nominee. After uploading the documents, they need to enter the nominee share in percentage. The depository records the nomination details in its database and sends a confirmation to the investor.

In conclusion, depositories play a crucial role in the nomination process of demat accounts. They maintain records of dematerialized securities and facilitate the transfer of ownership of securities. They also provide online facilities for adding, modifying, or deleting nominees. Nominating a person ensures a smooth transfer of securities in case of the investor’s death.

Mandatory Requirement of Aadhaar and PAN

To add a nominee to a demat account, it is mandatory to link the account with the holder’s Aadhaar and PAN. This requirement is in accordance with the Securities and Exchange Board of India (SEBI) regulations, which aim to ensure transparency and prevent fraudulent activities in the stock market.

To link the Aadhaar and PAN with the demat account, the account holder must follow the instructions provided by the depository participant (DP). The process usually involves providing the DP with the necessary documents and information, such as the PAN card, Aadhaar card, and a self-attested copy of the nominee’s identity proof.

Once the documents are verified, the DP will link the nominee’s details with the demat account. The account holder will receive an OTP on their registered mobile number, which they must enter to complete the process. It is important to note that the OTP must be entered within a specific timeframe, as it expires after a few minutes.

In case the account holder fails to link their Aadhaar and PAN with the demat account, the account may be frozen, and they may not be able to carry out any transactions. Therefore, it is crucial to complete the linking process before the deadline.

Overall, linking Aadhaar and PAN with the demat account is a mandatory requirement that ensures transparency and prevents fraudulent activities. By following the instructions provided by the DP and entering the OTP within the specified timeframe, account holders can easily add a nominee to their demat account.

Nomination in Joint Demat and Trading Accounts

When it comes to a joint Demat and trading account, the nomination process can be slightly different from an individual account. In a joint account, all the account holders have to agree on the nomination details.

According to the Securities and Exchange Board of India (SEBI), in the case of a joint account, the nomination can be made only in favor of one person. This means that if there are two account holders in a joint account, they can nominate only one person as the nominee.

To add a nominee to a joint demat and trading account, all the account holders need to sign the nomination form. The nominee details, such as name, address, and relationship with the account holder, need to be filled in the form.

It is important to note that in a joint account, the nominee’s rights arise only after the death of all the account holders. This means that if one of the account holders dies, the surviving account holder(s) will have full control over the account. The nominee’s rights will come into effect only after the death of all the account holders.

It is also important to keep the nomination details up-to-date in case of any changes in the nominee’s information. The account holders can update the nomination details by filling a fresh nomination form and submitting it to the depository participant (DP) or the Brokers.

In summary, adding a nominee in a joint demat and trading account requires the agreement of all the account holders. The nomination can be made only in favour of one person, and the nominee’s rights arise only after the death of all the account holders. It is important to keep the nomination details up-to-date by submitting a fresh nomination form in case of any changes.

Opting-In and Opting-Out of Nomination Facility

To add a nominee to a demat account, one needs to opt-in for the nomination facility. Similarly, if one wants to remove a nominee from their demat account, they need to opt-out of the nomination facility. The nomination facility allows demat account holders to nominate up to three individuals who will receive the securities in case of the account holder’s death.

To opt-in or opt-out of the nomination facility, one needs to follow certain steps. The process can be completed online or offline, depending on the depository participant (DP) and the demat account holder’s preference.

Opting-In for Nomination Facility

To opt-in for the nomination facility, the demat account holder needs to follow these steps:

1. Visit the website of the depository participant (DP) where the demat account is held. For example, NSDL or CDSL.
2. Log in to the demat account using the DP ID, client ID, and PAN.
3. Click on the “Nomination” or “Nominee” option.
4. Enter the details of the nominee, such as name, address, and relationship with the account holder.
5. Upload the necessary Documents, such as a copy of the nominee’s PAN card and a photograph.
6. Submit the nomination form and wait for confirmation from the DP.

Once the nomination is confirmed, the nominee’s name will be added to the demat account, and they will receive the securities in case of the account holder’s death.

Opting-Out of Nomination Facility

To opt out of the nomination facility, the demat account holder needs to follow these steps:

1. Visit the website of the depository participant (DP) where the demat account is held.
2. Log in to the demat account using the DP ID, client ID, and PAN.
3. Click on the “Nomination” or “Nominee” option.
4. Select the option to “Opt-Out” of the nomination facility.
5. Confirm the opt-out request and wait for confirmation from the DP.

Once the opt-out request is confirmed, the nominee’s name will be removed from the demat account, and they will not receive the securities in case of the account holder’s death.

It is important to note that the nomination facility is not mandatory, but it is recommended to avoid any legal disputes in case of the account holder’s death.

Transfer of Securities to Nominee

When a demat account holder passes away, the securities in the account are transferred to the nominee. This process is known as transmission and is done by law. The nominee can be a person or an entity, such as a trust or a company.

The transfer of securities to the nominee is a straightforward process, but it requires certain documentation. The nominee needs to submit an application for transmission of securities along with the necessary documents to the DP (Depository Participant) with whom the demat account is held. The DP will then verify the documents and transfer the securities to the nominee’s account.

It is important to note that the nominee does not become the owner of the securities. They are merely the custodian of the securities on behalf of the legal heirs of the deceased demat account holder. The legal heirs can claim the securities from the nominee by providing the necessary documentation.

In case the nominee is not willing to act as the custodian of the securities, they can renounce their nomination in favor of the legal heirs. The legal heirs can then claim the securities by providing the necessary documentation.

It is also important to update the nominee details in the demat account from time to time. This can be done by filling up the nomination form and submitting it to the DP. The nomination form should contain the details of the new nominee, along with their address and contact information.

In conclusion, the transfer of securities to the nominee is a crucial aspect of estate planning. It ensures that the securities are not frozen in the demat account and can be claimed by the legal heirs in a timely manner. It is important to keep the nominee details updated to avoid any complications in the future.

Verification Process for Nomination

When adding a nominee to a Demat account, the verification process is a crucial step that must be completed to ensure that the nomination is valid. The verification process is designed to confirm the identity of the nominee and ensure that they are authorized to act on behalf of the account holder in case of any unfortunate event.

The verification process may vary depending on the Depository Participant (DP) and the type of account. Generally, the verification process involves submitting identification details of the nominee, such as their name, address, and contact information. The nominee’s identification details must be accurate and match the information provided in their identification documents.

To verify the nominee’s identity, the DP may require the nominee to provide their signature, thumb impression, or both. The DP may also send an OTP (One-Time Password) to the nominee’s registered mobile number or email address to confirm their identity. In some cases, the nominee may be required to provide a witness who can verify their identity and sign the nomination form.

The DP may also require the account holder to update their personal details, such as their registered mobile number or bank account information, before adding a nominee to the account. This is to ensure that the account holder’s information is up-to-date and accurate.

In addition, the DP may require the account holder to provide their DP ID and client ID to add a nominee to the account. These details are used to identify the account holder and ensure that the nomination is linked to the correct account.

Overall, the verification process for adding a nominee to a Demat account is designed to ensure that the nomination is valid and authorized. It is important for account holders to follow the DP’s instructions carefully and provide accurate information to avoid any delays or complications in the verification process.

Special Considerations for Minor Nominee

When adding a minor nominee to a Demat account, there are some special considerations to keep in mind. A minor is a person who is below the age of 18 years. Here are some important points to consider when adding a minor nominee:

• The minor nominee cannot operate the Demat account until he/she attains the age of 18 years. Until then, the account will be operated by the guardian appointed by the account holder.
• The guardian appointed for operating the account of the minor nominee must be a natural guardian. This means that the guardian must be the father or mother of the minor nominee. In case the father or mother is not alive, the guardian can be the legal guardian appointed by the court.
• The account holder must provide the name and details of the guardian in the nomination form. The guardian’s details must include the name, address, PAN, and relationship with the minor nominee.
• The account holder can also mention the percentage of the securities that will be held by the minor nominee. This will help in the smooth transfer of securities to the minor nominee when he/she attains the age of 18 years.
• The account holder must also provide the name and details of the person who will act as a witness to the nomination form. The witness must be a person who is not a nominee or the guardian of the minor nominee.

It is important to note that the account holder can change the guardian of the minor nominee by submitting a new nomination form. The account holder can also change the percentage of securities held by the minor nominee. However, any changes made to the nomination form will be effective only after the approval of the depository participant.

Overall, adding a minor nominee to a Demat account requires careful consideration of the legal and operational aspects. By following the guidelines provided by the depository participant, the account holder can ensure that the securities are transferred smoothly to the minor nominee when he/she attains the age of 18 years.

Legal Status of Nominee and Legal Heir

When it comes to a Demat account, it is important to understand the legal status of a nominee and a legal heir. A nominee is a person appointed by the account holder to receive the securities in case of the account holder’s death. On the other hand, a legal heir is a person who is entitled to inherit the assets of the deceased account holder.

In case the account holder has appointed a nominee, the nominee will have the right to receive the securities held in the Demat account in case of the account holder’s death. However, the nominee will not become the owner of the securities. The nominee will only hold the securities in trust for the legal heirs of the deceased account holder.

In case the account holder has not appointed a nominee, the legal heirs of the deceased account holder will have to go through the legal process of obtaining a succession certificate or a probate to claim the securities held in the Demat account.

It is important to note that the legal heirs of the deceased account holder will have priority over the nominee when it comes to claiming the securities held in the Demat account. This means that if there is a dispute between the legal heirs and the nominee, the legal heirs will have the right to claim the securities.

In case the legal heir is the same as the nominee registered in the Demat account, the transmission process becomes easier. The nominee has to submit a transmission form, a notarized death certificate of the deceased person, and the client master of the nominee’s Demat account provided by his/her Depository Participant.

Therefore, it is advisable to appoint a nominee while opening a Demat account to ensure smooth transmission of securities in case of the account holder’s death. It is also important to keep the nomination details updated in case of any changes in the nominee’s details or in case of any changes in the legal heirs of the account holder.

Conclusion

Adding a nominee to a Demat account is essential for investors who want to ensure that their securities are transferred to the right person in case of their unfortunate demise. The process of adding a nominee involves logging in to the Demat account, navigating to the profile section, and selecting the option to add a nominee.

The investor then needs to provide the nominee’s details, including their name, address, and contact information, and upload an ID proof. Adding a nominee to a Demat account offers several benefits, such as hassle-free transfer of securities, easier transmission of securities, and a clear roadmap for the transfer of securities.

It is essential to keep in mind that there may be charges for adding a nominee, and investors should review the fee structure and terms and conditions before initiating the process. By adding a nominee to a Demat account, investors can ensure that their securities are transferred to their loved ones without any hassle and enjoy peace of mind.

Converting Physical Shares to Demat

To trade physical shares, one must first convert them into dematerialized (demat) form. This process of converting physical shares to demat is called dematerialisation. Once the physical shares are converted into demat form, they can be traded electronically.

To convert physical shares into demat form, one needs to open a demat account with a depository participant (DP) such as NSDL or CDSL. The demat account will hold all the shares in electronic form.

To dematerialize physical shares, the shareholder needs to submit a Dematerialisation Request Form (DRF) to the DP. The DRF should contain all the details of the shares to be dematerialized, including the name of the company, number of shares, and distinctive numbers. The shareholder should also attach the physical share certificates to the DRF.

Once the DP receives the DRF and the physical share certificates, they will verify the details and initiate the dematerialisation process. The shares will be credited to the shareholder’s demat account within a few days.

It is important to note that the dematerialisation process is irreversible. Once the physical shares are converted into demat form, they cannot be converted back to physical form.

In summary, converting physical shares to demat form is a necessary step for trading shares electronically. This process involves opening a demat account with a DP, submitting a DRF along with physical share certificates, and waiting for the shares to be credited to the demat account.

Frequently Asked Questions

Can I add nominee in my demat account online?

Yes, you can add a nominee to your demat account online. Most demat account service providers offer an online option to add a nominee. You can log in to your account and navigate to the ‘My nominees’ section to add a nominee.

How can I declare my demat account nominee?

To declare a nominee for your demat account, you need to fill out a nomination form. You can obtain the form from your demat account service provider or download it from their website. Fill out the form with the required details, including the name and address of the nominee, and submit it to your service provider.

How do I add a nominee to my CDSL?

To add a nominee to your CDSL demat account, you need to log in to your account and navigate to the ‘Nominee details’ section. Click on the ‘Add nominee’ option and fill out the required details, including the name and address of the nominee. Submit the form and the nominee will be added to your account.

How do I add a nominee online?

To add a nominee to your demat account online, you need to log in to your account and navigate to the ‘My nominees’ section. Click on the ‘Add nominee’ option and fill out the required details, including the name and address of the nominee. Submit the form and the nominee will be added to your account.

What is the process to update nominee in NSDL demat account?

To update the nominee in your NSDL demat account, you need to log in to your account and navigate to the ‘Update personal details’ section. Tick the radio button stating ‘Add/Update nominee details’ and update the nominee details in the next page. Click on the ‘Save’ tab and submit the form.

What is the last date to add nominee in demat account?

As of the current date (Fri Jul 21 2023), there is no specific last date to add a nominee to your demat account. However, it is recommended to add a nominee as soon as possible to ensure that your investments are protected in case of any unforeseen circumstances.