Mar 21, 2024 Value Broking 4 Mins 1.3K

Investors need a Demat account to trade in the stock market in India. The Demat account is an essential aspect of a trader’s investment as it holds all their securities, share bonds, and funds. It is practically a safe vault for their investments. But you may wonder what will happen if something happens to the owner of the Demat account. Do not stress yourself, as the facility for the transfer of shares on the death of a Demat account holder is available.

One of the most basic yet essential things that an investor can do is appoint a nominee for their Demat account. As the future is unpredictable and you never know what it holds, instead of jeopardizing your efforts by leaving everything to dust, leave your shares, securities, and bonds to your loved one.

When you’re no longer there to make sure that your loved ones receive all the savings that you made for them, do not worry, as the chance to appoint a nominee is available to you.

The Demat account holder is the sole owner of their investment and has a monopoly over the possession of all the shares and securities in the Demat account. You can appoint anyone as your nominee and be confident that everything you left behind will reach your family or friends who you care about.

The transmission of shares on the death of a Demat account holder requires a systematic procedure that a nominee must follow to claim the ownership of the shares, bonds, or funds of the deceased Demat account holder.

The Procedure to Transfer Shares on a Demat Account Holder

The following is the procedure how to transfer shares on the death of a Demat account holder:

  • The nominee will have to fill out the Transmission Request Form (TRF) for the transmission of shares on the death of a Demat account holder; the nominee can take the TRF form from the depository participant of the late Demat account holder.
  • After the nominee fills in all the required details in TRF, they will have to submit the form to the depository participant, along with the death certificate of the late Demat account holder.
  • DP may also ask the nominee to prove their relationship with the deceased Demat account holder. For example, the nominee can submit their address proof, identity proof, or married to the late Demat account holder, their marriage certificate, etc.
  • When the nominee manages to submit all the required documents to the DP, and only after the DP is satisfied with all the submitted documents after thoroughly examining them, they will transfer the bonds and shares of the late Demat account holder into the nominee’s account.

The points mentioned above are only the standard procedure. The DP of the late Demat account holder may ask the nominee of the Demat account holder to go through various procedures. For example, they will ask it before the transmission of shares on the death of a Demat account holder or the transfer of their securities or the bonds to the nominee’s account.

Conclusion

Many investors often overlook the importance of a nominee. Still, it is always wise to add a nominee to your Demat account because it will make the transmission of shares on the death of the Demat account holder easier for your nominee. 

You do not know what will happen next in your life, and instead of taking a risk, be sure that you have left an umbrella of financial security for your loved ones. Having a nominee will also eliminate the stress of your heir visiting the court and filling out multiple forms to claim theirs rightfully.

You will have to pay a certain amount every time you change your nominee, but that amount will not get included in this piece as that amount differs from one DP to another.

So, do not be ignorant of the process of adding a nominee to your Demat account.

You can ask your depository participant (DP) how to add a nominee to your Demat account. You can simply google the details and ask your DP to provide you with the proper guidance regarding this matter. You have the full right to remove someone as your nominee, as it is not permanent, and the Demat account holder is the complete owner of their shares and funds.

Frequently Asked Questions (FAQs)

The heir will still have to submit the TRF form and the death certificate to the DP along with the following mentioned documents for the transfer of shares upon the death of a Demat account holder:

The facility of an online transfer of shares if the Demat account holder meets with an unfortunate accident is not available. The nominee will have to be physically present for the entire process of the fund’s transfer, and the DP of the late Demat account holder will verify the nominee personally before handing over the ownership of the securities.

No, but it is wise to add a nominee to your Demat account for future safety. Because you never know what will happen in the future, rather than taking an unnecessary risk, you can have the peace of mind that you have left everything for your loved ones, and nothing will be in vain.

Submit a notarized copy of the death certificate, nominee’s KYC, and relevant documents to the company’s registrar or depository participant.