Can Minors Apply for IPOs? Rules, Process & Documents Explained

Initial Public Offerings (IPOs) allow companies to offer equity to the public for the first time. In India, participation in IPOs is governed by regulatory frameworks that also extend to minors through guardian-operated arrangements. While minors cannot enter contractual transactions independently, securities regulations permit IPO participation through accounts managed by a legal guardian, subject to documentation and compliance requirements.

Minors cannot submit IPO applications independently under Indian contract law. However, applications may be submitted on their behalf through a parent or legal guardian using a Demat account opened in the minor’s name.

Eligibility for Minors

Eligibility is determined through guardian representation. The guardian provides banking linkage and identity verification, while securities are held in the minor’s Demat account until majority.

A Demat account is essential for storing and holding shares in electronic form. It is a requirement for anyone participating in the stock market, including minors.

What is a Demat Account?

A Demat account holds securities (stocks, bonds, etc.) electronically within India’s depository system, replacing physical certificates and enabling settlement through recognised infrastructure.

How Minors Can Open a Demat Account

Minor Demat accounts are opened in the child’s name and operated by a guardian. Identity records for both parties, proof of age, and bank linkage form part of onboarding under depository norms.

IPO applications submitted in a minor’s name follow the standard retail investor framework, with the parent or legal guardian managing all operational aspects while ownership of securities remains in the minor’s name.

Application Submission

Applications are submitted under the retail category through ASBA or UPI-enabled platforms. The minor’s Demat account details are used for IPO allotment purposes, while the guardian’s bank account is linked for fund blocking.

The application form captures identifying details of both the minor and the guardian. These records are used by intermediaries and registrars for verification in accordance with SEBI regulations and depository norms. Supporting documentation relating to identity, age, and banking linkage forms part of the onboarding and validation process.

Fund Blocking and Allotment Processing

Upon submission, the application amount is blocked in the guardian’s bank account under the ASBA or UPI mechanism. The blocked funds remain earmarked until the allotment process is completed.

If shares are allotted, they are credited to the minor’s Demat account. In cases of non-allotment or partial allotment, the blocked amount is released in line with standard IPO settlement procedures.

The documentation for minors applying for IPOs involves both the minor and the guardian’s documents.

Documents for the Minor:

• Birth Certificate or School Certificate for age proof.

• Minor’s PAN Card
   

Documents for the Guardian:

• Guardian’s PAN Card

• Guardian’s Proof of Address (Aadhaar, Voter ID, etc.)

• Guardian’s Bank Account Details for the IPO application and refund processing
   

Role of Guardian in Demat Account

The guardian manages applications, transfers, and corporate actions, and ensures regulatory documentation remains current. Once the minor turns eighteen, this authority ceases.

On reaching adulthood:

• Fresh KYC verification is required

• Guardian operating rights are withdrawn

• The minor Demat account is converted into a regular account held directly by the individual
   

Trading access may be enabled only after completing standard onboarding requirements.

Using a minor account is a regulatory provision rather than a financial strategy. Ownership is recorded for the child, but operational responsibility rests entirely with the guardian until majority.

Minor-linked investments typically feature:

• Extended holding horizons

• Longer compounding timelines

• Early exposure to financial systems and market mechanics
   

These characteristics arise from the structure of minor accounts rather than from IPO participation alone.

IPO participation in a minor’s name operates within a guardian-managed framework. All application activity, payment authorisation, and account access remain under the guardian’s control until the minor reaches legal adulthood.

Income arising from such investments is governed by clubbing provisions under the Income Tax Act, where applicable. Standard retail investor limits and allotment rules apply, as there is no separate investment category exclusively defined for minors under SEBI regulations.

IPO holdings registered in a minor’s name are subject to the same market price movements as any listed security. Operational authority over these holdings remains with the guardian until the account transitions to regular status at age eighteen.

Independent trading access is not available during minority, and regulatory frameworks require fresh KYC and account restructuring once majority is attained. These structural features distinguish minor-held securities from individually operated adult accounts.

Indian securities regulations permit IPO participation for minors through guardian-managed structures. Ownership is recorded in the child’s name, while operational processes remain supervised until adulthood. These arrangements integrate minors into the broader capital market framework under defined compliance standards.

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.