Opening a Demat Account for a Partnership Firm

Opening a Demat account for a partnership firm involves a defined process that includes selecting a Depository Participant (DP), completing the required account opening formalities, and submitting documentation at both the firm and partner levels. This typically covers the partnership deed, the firm’s PAN and address proof, registration details where applicable, and identity and address proof for all partners and authorised signatories.

A partnership firm Demat account is an electronic account opened in the name of a partnership entity, whether registered or unregistered, for holding securities in dematerialised form. The account is maintained with a depository participant (DP), such as a bank or brokerage firm, and is linked to a depository system operated by NSDL or CDSL.

This type of Demat account is distinct from an individual account, as it is opened at the firm level and reflects ownership of securities by the partnership entity rather than by individual partners. Account operations are carried out by authorised partners as per the firm’s documented authority structure.

Eligibility criteria define whether a partnership firm meets the regulatory and operational conditions required to hold securities in dematerialised form. A partnership firm, whether registered under the Partnership Act, 1932 or operating as an unregistered entity, is considered eligible if it satisfies the following conditions:

• The firm has a valid partnership deed that establishes the existence of the partnership and outlines partner details.
  

• The firm operates an active bank account in its own name.
  

• Specific partners are formally authorised to operate the Demat account through a resolution or letter of authority.
  

• KYC requirements are completed for the firm and for all partners in line with SEBI and depository regulations.
  
  

These eligibility conditions apply uniformly to partnership firms seeking to open a Demat account, irrespective of registration status, subject to documentation and verification norms.

The process for opening a partnership firm Demat account generally includes the following stages:

Selection of a Depository Participant (DP)

A DP offering services for business or institutional accounts is selected based on its operational framework and service features.

Completion of the Account Opening Form

The Demat account opening form is completed with details of the partnership firm and its partners, either online or in physical format.

Submission of Supporting Documents

Required firm-level and partner-level documents are submitted along with the application form.

KYC Verification

KYC verification is carried out for the partnership firm and all partners. Depending on the DP, this may be completed digitally through document uploads and video verification.

Authorisation of Operating Partners

A resolution or authority letter is submitted specifying the partners authorised to operate the account and execute transactions.

For transaction authentication, authorised partners may be required to use a TPIN, depending on the DP’s operational setup. A TPIN is used to authenticate certain Demat-related instructions such as off-market transfers or pledges.

In-Person Verification (IPV)

IPV is conducted for authorised signatories, either physically or through video-based verification, based on DP procedures.

Account Activation

After successful verification and document approval, the Demat account is opened in the firm’s name and the BO ID is issued.

Documentation requirements for a partnership firm Demat account are generally more extensive than those for individual accounts. These typically include:

Proof of Firm Existence

• Certified copy of the partnership deed

• Registration certificate, where applicable

Proof of Firm Address

• Recent utility bill

• Bank statement or passbook

• Lease agreement or property tax receipt

Partner Identity and Address Proof

• PAN card of each partner

• Address proof such as Aadhaar, passport, voter ID, or driving licence

Financial Documents (where required)

• Income tax return acknowledgement

• Audited financial statements

Bank Proof

• Cancelled cheque of the firm’s bank account

• Bank statement reflecting the firm’s account details

Authorisation Documents

• Resolution or authority letter naming authorised partners

• Signatures of all partners

Additional Documents (if applicable)

• GST registration certificate

• Partner list on firm letterhead

The following operational aspects are commonly associated with partnership firm Demat accounts:

• KYC documentation is required for all partners, irrespective of account operating authority.
  

• Only partners authorised through formal documentation are permitted to issue account instructions.
  

• A PAN card in the name of the partnership firm is required for account opening.
  

• Consistency across firm name and partner details in all submitted documents is necessary to avoid processing delays.
  

• Ledger balance reflects funds and charges associated with the Demat account and is used to track transaction-related debits and credits.

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 is typically observed 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

Certain issues are commonly observed during the account opening process:

• Incomplete documentation, including missing signatures or unclear authorisation

• Submission of personal bank account details instead of firm-level banking proof

• Delays in updating partnership changes with the DP

• Mismatches in firm or partner details across submitted documents

A partnership firm Demat account requires submission of partnership account documents to verify the firm's legal status while holding securities electronically in the firm's name rather than individual partners. Securities such as shares, bonds, exchange-traded funds, and mutual fund units are issued and settled in dematerialised form through depository systems, making a firm-level Demat account necessary when investments are undertaken by the partnership entity.

Holding securities through a Demat account opened in the firm's name ensures investments are treated as firm assets, supporting clear ownership attribution and consistent accounting treatment. This structure allows centralised holding of the firm's securities, digital record maintenance without physical certificates, and execution of buy, sell, and transfer transactions through authorised depository mechanisms.

In addition, a partnership firm Demat account facilitates compliance with SEBI and depository requirements for dematerialised holdings. It enables Depository Participants to confirm operational authority and KYC processes, while supporting centralised record-keeping, audit trails, and regulatory reporting where applicable.

Opening a Demat account for a partnership firm involves a structured process defined by regulatory and operational requirements. Completion of KYC for all partners, clear authorisation of account operators, and consistency across firm documentation are key elements of the account opening framework. The process and timelines are influenced by documentation quality and the DP’s verification procedures.

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.