Nominee in Demat Account

Have you ever wondered what happens to the shares in a demat account, if the account holder dies? Well! Like any other account, the rights are transferred to the Nominee in Demat Account.

So, if you are having a demat account, then here is the complete information of how you can add a nominee and the rules of nomination.  

Let’s get started!

Nomination in Demat Account 

Basically, the nomination is a process of designating a person to handle and check the investments of an individual after his death.

Now there are two situations:

1. If the demat account is held by a single individual
2. Joint demat account holding

In the first case, if the individual has added a nominee, then the holdings will be transmitted to him or her after the account holder dies.

On the other hand, in the case of a Joint demat account, the shareholding will first be transmitted to the surviving holder. However, the holder has to present the transmission form and a duly attested copy of the deceased holder’s death certificate. 

Only when both the holder dies, the securities are transmitted to the nominee. 

In both cases, the nominee has to make a request of transmitting the ownership to him or her. 

For this, the nominee has to submit the transmission form along with the duly signed notarized copy of the death certificate. 

On acceptance and verification, the holder’s securities will be transmitted to the nominee demat account within 7 days. 

Now, in the situation of no nomination, if the single held demat account holder dies at that point, the securities will be transferred to the family of the deceased as fixed by the order of the competent court.

The process is quite cumbersome and the family member or other related person as to fulfill legal formalities

In the case where the value of the securities is less than Rs 1 lakh, the request for the transmission can be processed when the following documents will be submitted by the legal heirs. The documents include:

• Transmission form
• Attested death certificate copy
• Letter of identity
• Affidavit in the prescribed format
• NOC of all legal heirs

How to Add Nominee in Demat Account?

Adding a nominee to your demat account is a completely offline process, this is because the DP asks for the physical signature of the nominee. 

Generally, there are no fees charged to add a nominee to your demat account. However, there are few brokers who charge fees in case you change the nominee details. 

For eg: Zerodha charges ₹25+18% GST to change the nominee of the demat account. 

Demat Account Nomination Form

To add a nominee to your existing or new demat account follow the steps below:

• Just visit the DP website and download the transmission form. 
• You can also download the form from the NSDL or CDSL website.
• Fill in the form with the nominee details. 
• Ask the nominee to sign it at the required place.
• Along with this, the account holder along with two witnesses must sign the nomination form.  
• After meeting all the requirements, courier the form to the DP head office. 

Once you add the nominee to the demat account, you can check the information in your trading platform after a few days. 

How to Change Nominee in Demat Account? 

You can change your nominee at any point in time. To update the nominee details follow the steps below:

• Download the nominee modification form from the DP website. 
• Fill the form, update the information of the nominee.
• Get it signed.
• Send the modification form along with the hard copy of the demat account nomination form to the headquarter of the respective stockbroker. 

How Many Nominees in Demat Account Can Be Added?

In general, both the depositories allow the demat account holder to add three nominees to their respective demat accounts. 

In case, the holder adds more than one nominee, he or she can designate the percentage of shares for the respective nominee. 

For eg: Mr. X  has a demat account in Zerodha. While opening an account he added three nominees, Mr. A, Mr. B, and Mr. C

Now he allotted a different percentage of shares to each.

Mr. A=50%

Mr. B= 30%

Mr. C= 20%

Now, he holds the shares of ₹1,00,000 in his demat account. Here if Mr. X dies, then the allotment of shares would be as follow:

Mr. A= shares of ₹50,000

Mr. B= shares of ₹30,000

Mr. C= shares of ₹20,000 

Rights of Nominee in Demat Account 

Being a nominee you can reap certain benefits. Here are some of the rights provided to the nominee of the demat account:

• He or She can trade in the shares of the account holder. 
• The nominee is entitled to the same dividend or interest as the original shareholder. 
• Also, he or she can exercise all the membership rights. 

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Conclusion

Essentially, the nomination is a process of assigning a person to manage and monitor an individual’s investment after his or her death.

It is valid that you can keep the demat account as an individual or together. The nomination on the Demat account is possible as if by leaving the nominee if the actual demat account holder dies, the transfer process automatically becomes painless.

So whether you have a demat account or are thinking of opening a new account, make sure to add nominee details to avoid any hassle.

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