If you want to trade in the stock market, you need a Demat account. You can open one with any Depository Participant (DP) authorised by the Securities and Exchange Board of India (SEBI). The Demat account allows you to store securities in electronic form. The DP registers the accounts with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
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In a circular released by SEBI in July 2021, Demat account holders must give a choice of nomination. Not complying with the regulations by the deadline (September 30, 2023) can cause the deactivation of your trading and Demat accounts. In that case, you cannot continue stock market trading till you add a nominee to your account.
A nominee refers to an individual who will receive the investments of your account in the case of any unprecedented event. You can nominate your parents, spouse, sibling, children, or others. You can also nominate a minor with the details of their guardian. The authorised person can able to own, handle, and benefit from the account.
You can add a maximum of three nominees to your Demat account. Each nominee will have an assigned percentage in the account. For instance, if you nominate three people, you can assign 35% to one nominee, 40% to the next, and 25% to the third.
Adding a nominee online is a straightforward process. You need to include the names of the nominees in the account opening form you submit to your chosen broker. You can add, change, or delete the information later by giving an Annexure 1A form to your broker. Here are the steps to add a nominee online:
It is also possible to submit an online nomination on NSDL. Here’s what you need to do.
The online nomination facility enables the smooth transfer of your investments to a person appointed by you. It saves time for your family in case of an unfortunate event and ensures their financial security. A new investor can add a nominee while opening a Demat account. On the other hand, an existing account holder can edit account details to add nominees.