How to Open a Demat Account for a Partnership Firm

To open a demat account for a partnership firm, you must first select a Depository Participant (DP) and complete the application form. You will then need to submit the Partnership Deed, the firm's PAN card and address proof, the registration certificate (if applicable), and the PAN and address proof for all partners and authorised signatories. 

Opening a Demat account for a partnership firm is a procedural process involving KYC verification, document submission, and adherence to regulatory norms. This article explains the eligibility, process, and documentation needed to successfully open such an account.

A partnership firm Demat account is an electronic account opened in the name of a registered or unregistered partnership, allowing it to hold securities in dematerialised form. The account is maintained with a depository participant (DP) — which can be a bank, broker, or financial institution — linked to NSDL or CDSL.

Unlike an individual Demat account, this account requires documentation that verifies the identity of the firm and its partners, as well as proof of authority for operating the account.

A partnership firm — whether registered under the Partnership Act, 1932 or operating as an unregistered entity — can open a Demat account, provided it:

• Has a valid partnership deed
  

• Operates a bank account in the firm’s name
  

• Authorises specific partners to operate the account through a board resolution or letter of authority
  

• Complies with KYC norms for all partners as per SEBI and depository regulations

Follow these steps to get your firm’s Demat account up and running:

1. Select a Depository Participant (DP)

Choose a DP offering services suitable for institutional or business accounts. Compare processing timelines, service quality, and costs.

2. Fill the Account Opening Form

Obtain the partnership firm Demat account opening form from the chosen DP — either online or in physical format. This form will require details of the firm and all partners.

3. Submit Required Documents

Along with the filled form, submit all supporting documents as listed in the documentation section below.

4. Complete KYC Process

KYC will be conducted for the firm and for each partner. Many DPs now offer digital KYC through scanned document uploads and video verification.

5. Authorise Operating Partners

Submit a partnership firm resolution or authority letter stating which partners can operate the account, sign instructions, and carry out transactions.

6. In-Person Verification (IPV)

DPs conduct IPV for at least the authorised signatories. This can be done physically or through video conferencing, depending on the DP’s process.

7. Account Activation

Once verification is complete and documents are approved, the DP will open the Demat account in the firm’s name and provide the account number (also known as the BO ID).

The documentation requirement is more extensive than for an individual account. The following are typically required:

Proof of the Partnership Firm’s Existence

• Partnership deed (certified true copy) clearly stating the business name, partners’ names, and business activities
  

• Certificate of registration (if registered under the Partnership Act)
  

Proof of Address of the Firm

• Latest utility bill (electricity, telephone, gas)
  

• Bank statement or passbook (latest 3 months)
  

• Lease agreement or property tax receipt in the firm’s name
  

Proof of Identity and Address of All Partners

• PAN card of each partner (mandatory)
  

• Aadhaar card, passport, voter ID, or driving licence for address proof
  

Financial Proof (if required by DP)

• Latest income tax return acknowledgement
  

• Audited financial statements for the previous financial year
  

Bank Proof of the Firm

• Cancelled cheque leaf of the firm’s bank account
  

• Bank statement showing the firm’s name and account number
  

Authority to Operate Account

• Partnership firm resolution naming the authorised partners
  

• Signatures of all partners on the resolution/authority letter
  

Additional Requirements (if applicable)

• GST registration certificate
  

• List of partners on firm’s letterhead signed by all partners

Keep these key points in mind for a smooth process:

• All partners’ KYC is mandatory: Even if only a few partners operate the account, every partner’s identity and address proof must be provided.
  

• Authorisation must be clear: The DP will only accept instructions from the partners listed in the resolution.
  

• Firm’s PAN is required: A PAN card in the name of the partnership firm is mandatory.
  

• Names must match exactly: Any mismatch between names in documents and the form can delay processing.

• Understanding ledger balance:Always keep track of the Ledger Balance in Demat to monitor funds and charges linked to the account. This helps maintain smooth transactions and ensures there are no payment-related delays while buying or selling securities.

The time taken to open the account depends on the completeness of documentation and the DP’s verification process.

• Online with eKYC: If documents are complete and verified digitally, activation can happen within 1–3 working days.
  

• Offline or physical process: Where hard copies are submitted and physical verification is required, the process can take 5–7 working days.

While costs vary by DP, partnership firm accounts generally have:

• Account opening charges: ₹0 to ₹1,000 depending on the service provider
  

• Annual Maintenance Charges (AMC): Typically ₹500 to ₹1,000 per year
  

• Transaction charges: Per debit transaction, as per the DP’s tariff schedule

Always check the DP’s latest tariff sheet before proceeding.

Here are a few common mistakes to watch out for:

1. Incomplete documentation: Missing signatures, proofs, or unclear authority letters cause delays.
   

2. Using personal bank account details: Always provide the firm’s official bank account.
   

3. Not updating partnership changes: If partners join or leave, update the DP immediately with revised documents.
   

4. Name mismatches: Ensure consistency across PAN, partnership deed, and bank details.

Opening a Demat account in the name of a partnership firm offers several advantages that make investment handling easier and safer.

• Centralised investment management: All securities of the firm are stored in one account.
  

• Secure record-keeping: Eliminates risks associated with physical certificates.
  

• Ease of transactions: Enables smooth buying, selling, and transfer of securities.
  

• Regulatory compliance: Meets SEBI and depository requirements for holding securities.

Opening a Demat account for a partnership firm in India is straightforward if you have all documents ready and understand the process. By ensuring that KYC is completed for all partners, authorisations are clearly stated, and the firm’s information is consistent across documents, you can avoid delays.

Choosing a reliable DP with experience in handling institutional or firm accounts can make the process smoother and ensure compliance with all regulatory norms.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.