In previous blogs we had discussed
about the importance of holding a demat account in order to own shares. One
must have a Demat account to buy any company''''s shares. This can be opened with
the depository participant and shares are kept in paperless format. It is also
possible to open a Demat account on behalf of a minor.
The process of opening a demat
account for a minor is as follows.
Only the natural guardian (parents)
or court-appointed guardians may open the Demat accounts in the name of a minor
The guardian must fill out the
standard Demat account opening forms. It may be appropriate to fill out two KYC
forms, one for the guardian and one for the minor (to be filled and signed by
Documents and information
The guardian has to provide the
documentation needed and comply with KYC requirements. The date of birth of a
minor, with proof, must be obligatory. The guardian and the minor’s PAN will
need to be provided.
Reason for opening account
Before the account is issued, the
reason for opening the Demat account in the name of the minor must be
mentioned. There is a need to state this justification in writing. An email
from the guardian is also recognised by most institutions as written evidence.
The Account Process
Only the guardian will run the demat
account of the minor, before the minor becomes major. No trading account can be
linked to the Demat account of a minor.
On becoming a major
When the minor turns 18, the Demat
account will become inoperative. After which, you need to open a new Demat
account. It is possible to move the former holdings into a new account. You may
proceed with the same account, but a new agreement with the depository
participant must be signed by the minor.
· Shares in the demat account of a minor are generally received
by way of gifts.