How to Add a Nominee to a Demat Account

Nomination in a Demat account is a crucial aspect of investment planning. It ensures seamless transfer of your securities to the person of your choice in the event of your demise. This saves your loved ones from any unnecessary legal complications and delays. 

By adding a nominee, you can ensure a smooth and timely process while eliminating ambiguity and family disputes. Without this, you will need a probated Will, a succession certificate, and a letter of administration to transfer your assets, which is a lengthy process. 

A nominee is an individual appointed by the account holder to receive the securities held in the Demat account upon the account holder’s death. The nominee acts as a custodian of the securities and facilitates their transfer without the need for legal heirs to undergo lengthy succession procedures.

It is important to understand that nominees are not necessarily the legal heirs or owners of securities. They hold securities in trust and are responsible for transferring them to rightful heirs as per applicable laws.

Failing to add a nominee may lead to significant complexities, delays, and even legal disputes for your loved ones during an already challenging time. Here are some of the advantages of adding a nominee:

• Smooth Transfer of Assets: It allows for quick and hassle-free transfer of securities after the account holder’s demise, bypassing court procedures.
  

• Avoids Legal Disputes: Nomination reduces the chances of family disputes or confusion over the rightful ownership of securities.
  

• Compliance with SEBI Guidelines: SEBI mandates that investors should have the option to appoint a nominee for their Demat accounts.
  

• Peace of Mind: Knowing that your investments are protected and will be handled as per your wishes provides peace of mind.

SEBI has mandated specific guidelines and regulations for the process of nomination. Keeping these in mind is crucial to ensure a smooth and undisputed transfer of your valuable investments.

• Who Can Be a Nominee: Any individual can be nominated, including minors. However, if the nominee is a minor, a guardian must be appointed to receive the securities on their behalf.
  

• Multiple Nominees: Account holders can appoint more than one nominee and specify the percentage of securities each nominee is entitled to.
  

• Single and Joint Demat Accounts:

  • In a single-held account, the nomination is straightforward

  • In joint accounts, nomination can be made only by the first holder unless otherwise specified
    

• Nomination Across Accounts: Nomination is account-specific. Different Demat accounts may have different nominees.

You can add or update your nominee either online or offline, depending on the facilities offered by your Depository Participant (DP) or broker.

• Online Nomination
  Many brokers and DPs provide online platforms where you can log in to your account and fill out the nomination form digitally. This process is convenient and quick.
  

• Offline Nomination
  You can submit a physical nomination form at your DP’s branch office. The form requires details about the nominee, their relationship with you, and their identification details.

With advancements in technology, adding a nominee to your Demat account has become a simple procedure. Follow these steps:

1. Visit the official NSDL website

2. Click on the ‘Nomination Online’ option available at the home page

3. Once the new page opens, enter your DP ID, Client ID, and PAN details

4. Enter the OTP to authenticate the details you entered

5. To add a nominee, choose the ‘I wish to nominate’ option

6. On the subsequent page, enter details of the nominee you wish to nominate

7. Tick the checkbox on the eSign Service Provider's page and enter the OTP to authenticate nomination details

8. Complete the Aadhaar eSign process on the Protean eGov page and submit the OTP

    

A final confirmation page will appear on your screen once you complete this process.

You may appoint more than one nominee for your Demat account and specify the share of securities each nominee is entitled to. The total must add up to 100%. This allows you to distribute your holdings among family members or trusted individuals as you see fit.

To change or revoke your nomination in your Demat account:

• Submit a fresh nomination form with updated details or a cancellation request
  

• Follow the same submission and verification process as when adding the original nominee
  

• The DP processes the nomination changes and provides confirmation accordingly

If no nomination exists, the transfer of securities will take place according to the succession laws of India. This involves:

• Filing legal documents and succession certificates

• Potentially lengthy court procedures

• Delays in transfer and increased administrative costs

Nomination in a Demat account plays a vital role in protecting your securities and ensuring they are transferred according to your wishes without unnecessary delays or legal hurdles. Whether you opt to add a single nominee or multiple nominees, keeping your nomination details updated is an essential part of prudent investment management.

This content is for educational 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.