Demat Account Nomination - How to Add Nominee

What is a Demat Account?

A Demat account is an account type that holds shares and securities in electronic form. At the time the investor purchases the equity shares, mutual funds and other securities, the certificates are changed into a demat account, which now contains the electronic entries. One of the primary objectives of opening a demat account is to designate a depository participant (DP) that can include banks, financial institutions, and brokerages registered with SEBI. CDSL and NSDL are the two depository institutes that have the mandate of the depository services.

Adding Nominees to Demat Account

Investors can easily add or change the nominees in their demat account by following these simple steps:

1. Visit NSDL Website: In the first step, you must go to the NSDL website (nsdl.co.in) and click on the 'Nominate Online' link on the homepage.
2. Log in and Authenticate: Once done, please enter your DP ID, Client ID as well as PAN to authenticate via OTP then proceed to log in.
3. Select Nomination Option: "Opt out" if you don't wish to nominate or "I wish to Nominate someone" for nominating an electoral candidate after logging in.
4. Enter Nominee Details: During the nomination process, ensure that this information is entered correctly – this includes name, address, relationship to the nominee, and contact information.
5. Verify Nominee Information: The next step you take is to confirm the information of the nominee by checking the box beside the matched information.
6. Complete eSign Process: The link for Aadhaar-based eSign will be available through the portal and will direct you to sign the form electronically.
7. Submit OTP: The passcode generator will send you an OTP on the registered mobile number associated with your Aadhaar and will be used to complete the eSign process.
8. Get Confirmation: After the nomination process has been completed, your phone will display a confirmation message that will include the reference number.

How Many Nominees can be Appointed?

In accordance with SEBI-established demat account nomination regulations, a demat account holder may designate a maximum of three nominees for the account. The aim is to enable the account holder to designate multiple individuals, thereby expanding the range of possibilities for transferring securities maintained in the Demat account. When nominees are appointed, you may choose which ones will receive what percentage of your account.

Benefits of Appointing a Nominee

Adding a nominee to the Demat account offers investors and beneficiaries a range of benefits. The most prominent are as follows:

• Smooth Transfer of Securities: Adding a nominee ensures that money is transferred to your legal heirs smoothly in case of your demise.
• Avoids Legal Hassles: Heirs and beneficiaries are assigned ownership of shares and securities without going through the less pleasant and elaborate legal matters.
• Ensures Rightful Inheritance: Nomination provides a means for the account holder's shareholdings in the demat account to go to the nominee based on the latter's wishes.
• Prevents Asset Freezing: The operation of the Demat account may be suspended upon the death of the decedent without any nominee and until the legal representatives file the claims through the formal succession certificate or the issuance of probate to the will. Nomination eliminates this hassle.
• Avoids Disputes: The nominee added to the demat account is, by default, the only designated beneficiary of the account.

Conclusion

Appointing a nominee for your demat account is just as crucial as creating the account and investing. It guarantees a seamless succession of your shares and securities to the designated nominee, devoid of any legal complications or disputes. While nomination is not mandatory, all demat account holders should designate one to spare their family the burden of difficult documentation and complications that may unfold in the event of unforeseen circumstances.