Thousands and if not lakhs of Demat accounts and shares are not received by the investor’s immediate family when they pass away. The family might go to court, the bank and the stockbroker to access Demat account funds, but because of not having a nominee, family members never see those shares.
This is a way more significant issue than it may seem. Some investors may not know how the free Demat account works and the procedure for transferring shares if they pass away.
Many investors don’t even inform their families about their investments and where they invest in safeguarding themself. But this backfires because, at the untimely death of the account holder, their family will never know about the Demat and investments. According to the RBI, many such Demat accounts remain unclaimed forever. To be a responsible investor, you must add a nominee.
In this article, you will find out why adding a nominee to your Demat account is essential and the steps to register a nominee.
A Demat Account holds the electronic shares you can buy from the stock exchanges such as NSE and BSE. On these stock exchanges, you place an order. This order is known as delivery. Then, your order gets placed if someone sells his shares at the same price. The orders will match, and those shares will be linked to your Demat account.
People also open Demat accounts to invest not only in the stock market but also in other securities such as bonds, mutual funds, commodities and even more securities.
Why is Adding a Nominee Essential?
In the unfortunate situation of the passing away of the account holder, the nominee gets full benefit and hold of the Demat account. A nominee can get those shares transferred with no issues, such as court affidavits and no Objection Certificates. The nominee can get a hold of the Demat account of the deceased with only a transmission form and death certificate.
How Do I Add a Nominee to My Demat Account?
The process of adding a nominee consists of a few easy steps:
Step 1: Depending on the process, you must either fill out the form online or download the nominee form from the stockbroker website.
Step 2: Fill out the form accurately with all the details and signature of your nominee and your signature.
Step 3: If you filled a physical form, courier the nominee form to your stock broker’s office or submit the state if the process is done online.
Step 4: The stock broker will perform the necessary detail check and authenticity. Some stockbrokers will even require the KYC of the nominee, which is generally done online.
Step 5: After all the things are done, the nominee will be added successfully, and you will receive an email and message from the stockbroker.
The nominee to the Demat account can also be a minor, but it cannot be a non-individual such as a trust, partnership firm, power of attorney holder or Karta of HUF. Some stock brokers also ask you to add a nominee as soon as you open the Demat account, and even if they don’t, as a responsible investor, you should.
Investing in the stock market is good for the future, but what if, due to any mishap, there is a good chance those investments you have made will never see the light of the day and face your family if they are not nominees to your Demat account. So it is important to think of the future and beyond; hence you don’t have a nominee for your Demat account. Go to your stockbroker’s website and initiate the process.