SEBI Extends Deadline Until September 30 to Add Nominee to Demat Account

The deadline for nominations or opting out of them for trading and Demat account holders has been extended from March 31, 2023, to September 30, 2023. Adding a nominee to a Demat account is crucial to prevent account freezing and enable investors to trade in the Indian stock market.

The Securities and Exchange Board of India (SEBI) has extended the deadline for making nominations or opting out of a nomination for trading and Demat account holders from March 31, 2023 to September 30, 2023.

Failure to provide a choice of nomination by the new deadline will result in the freezing of trading and Demat accounts for debits. A Demat account is essential for trading shares in the stock market, and failing to add a nominee before the deadline will result in the account being frozen, preventing the investor from making further investments.

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It’s crucial to comply with the regulations set by the Securities and Exchange Board of India (SEBI) to avoid account deactivation. Non-compliance can result in freezing of the account, and the investor will not be able to trade in the stock market until the nominee is added to the account. It’s always better to complete this task well before the deadline to avoid any last-minute complications.

Deadline extension and nomination process

The compliance deadline was previously set by SEBI to March 31, 2022, but was extended by one year to March 31, 2023 after receiving feedback from stakeholders. It has now been further extended to September 30, 2023.

In July 2021, SEBI requested that all eligible account holders provide a choice of nomination. For those who have already provided nomination details, resubmission is not required. However, those who haven’t submitted nomination details yet, but intend to do so, can provide their nominations or opt-out of nominations.

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Investors can log in with two-factor authentication on trading platforms for stock brokers or depository participants that provide this service to submit or withdraw their nominations.

Identification details of the nominee/guardian of the minor nominee, mobile number, and e-mail ID, which were previously required, are now optional. The account holder must sign a declaration form, and if using a thumbprint instead of a signature, no witness signature is needed when filling out nomination or declaration forms online utilizing the e-sign feature.

Investors are advised to take this process seriously and complete it before the deadline to avoid any complications in trading shares in the stock market. Having a nominee added to the Demat account ensures that the investor’s holdings are protected in the event of any unforeseen circumstances.

Steps to add a nominee to Demat account

• Log in to the Demat account
• Go to ‘Profile Segment” and navigate to ‘My Nominees”
• Choose ‘Add Nominee’ or ‘Opt-out”
• Fill in the details and upload an ID proof for the nominee
• Enter the nominee’s share in percentage
• E-sign the document with an Aadhaar OTP, and the details of the nominee will be processed

Nominee appointment and eligibility

Investors can appoint a maximum of three nominees to their Demat account and assign percentages to each nominee in the account. For example, if an individual adds three nominees, they can assign 40 percent to the first nominee, 25 percent to the second nominee, and 35 percent to the third nominee.

Nominees can be a father, mother, spouse, siblings, children, or any other individual. A minor can also be added as a nominee, provided the details of their guardian are furnished.

Consequences of not adding a nominee

Failure to add a nominee to the Demat account before the deadline will result in the account being frozen, and investors will not be able to invest in the stock market. Adding a nominee is crucial to ensuring the smooth transfer of shares in the event of the investor’s death. Thus, investors are advised to complete the task before the deadline to avoid any inconvenience.

This article was originally published March 27, 2023. It was last updated March 28, 2023.

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