Demat or Dematerialization is a system of holding or keeping physical shares and securities in an electronic form. A Demat account is necessary for holding shares and making the process of trading easier. Without a Demat account or trading account, an investor can neither buy nor sell shares nor hold shares.
Process of Opening a Demat Account:
- Step 1: Selection of Depository Participant
- Step 2: Filling out the Dematerialization Request Form
- Step 3: Submission of necessary documents for verification by investor
- Step 4: Signing of agreement between the investor and the Depository Participant
- Step 5: Verification of Documents
- Step 6: Creation of Demat account
Impacts of having a Demat Account Nominee
When a Demat account holder passes away, it becomes tormenting for the heirs to claim ownership of the securities held by the deceased person. For this reason, it is crucial to have a nominee to the account. Registering a nomination for a Demat account can eliminate the need for documents like a will, a succession certificate for the transmission certificates, etc. An account holder can nominate up to three persons.
Check: Benefits of a Demat account
Need for a Nominee
In the case of the presence of a nominee, the transmission of shares becomes a lot easier. The nominees do not have to move to the court or gather a No Objection Certificate and affidavits from the courts.
However, if a nominee has not been preordained, the family members may not receive the shares or funds. According to the reports from RBI, there are thousands of instances where unclaimed deposits lie in the banks across the country. These accounts belong to those who either have not claimed the money or the account holder has deceased or have not filed nomination details.
If a single Demat account holder passes away, leaving a nominee, the share transmission process is simple. The nominee will have to submit a duly filled transmission form and a certified copy of the deceased person’s death certificate that a Gazetted Officer has attested.
How to add Nominee’s name in 5paisa Demat Account
5paisa makes it easy to add the name of Nominee to any Demat account. An investor can download the nomination form by visiting the 5paisa website and clicking on the Website’s “Forms Download” section. He needs to fill the nomination form correctly. He should add the nominee information (name, contact details, etc.) and get that person’s signature as well. Finally, the account holder has to authenticate the nomination form by putting his registered physical signature. Then he can courier the duly filled form to 5paisa’s office. 5paisa will process the request accordingly.