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A Demat account is an essential part of trading in the stock market to make your journey and maintain your risk and rewards. As you know, the Securities and Exchange Board of India (SEBI) has made the Demat account mandatory to trade in the money market. You can also open different types of Demat accounts. One of them is the joint Demat account, which allows the opening of Demat accounts for multiple Demat holders. Having a joint account allows the user to have multiple owners.
But you need to be aware that you cannot add a second holder after opening the Demat account. If the first holder wishes to add another name, then that can only be possible through the nominee’s name.
Once you open a joint Demat account with a registered depository participant (DP), then you cannot delete or remove a holder’s name. The joint holder in a Demat account needs to be your trusted one and close relative to avoid any future consequences. In case one of the joint holders passes away, the other holder needs to open another Demat account under their name, and then transfer all the holdings that were there in the joint holder Demat account.
Opening a Demat account in a joint type allows three account holders. One of the account holders is the primary holder, while the two other holders are the secondary holders. To validate a transaction, all the members of the joint account must allow the execution order. Remember that you cannot replace, remove, or modify the Demat holders’ names after the account is opened.
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Benefits of a Joint Demat Account
- Enhanced Security:
- A joint Demat account offers maximum security as it requires the signatures of all account holders for any share or securities transfer. This robust authentication process significantly reduces the risk of unauthorised or forged transactions.
- Efficient Ownership Transfer:
- In the unfortunate event of the demise of the primary account holder, the transfer of ownership in a joint Demat account is a seamless process. Submitting the death certificate of the deceased holder allows for a quick and straightforward transition of ownership to the remaining account holders.
- Cost-Effective Account Maintenance:
- Unlike individual Demat accounts that incur separate yearly Account Maintenance Charges (AMC) for each account, a joint Demat account minimises costs. Family members sharing a joint account only need to pay a single AMC, resulting in overall reduced expenses.
How To Open Joint Demat Account?
Joint holders in Demat accounts can open their desired account by following the steps below:
- Choose a well-known broker such as Share India.
- Simply download the mobile application or go to their website and click on the open Demat account option.
- Submit necessary documents such as a Know Your Customer (KYC) document, Electronic Clearing Services (ECS) form, etc. You will also need to add your PAN card and Address proof along with it.
- Fill up the form provided by the DP and then upload the form online. Make sure to check whether the Demat account is selected as a joint and then add the nominee details carefully.
- Within two days, you will receive your Demat account credentials on your registrated mobile number and email ID. In case of any issue, contact your broker and make sure the details are accurate.
A Few Things to Remember about Joint Holders in a Demat Account
While opening a joint account for your group investment needs, you need to know the following:
- There will be AMC, which you need to pay according to your brokerage firm.
- You will also need to pay transaction charges as per the size of your trade.
- Transferring of Demat account holding is done without any charge.
- There will be no charge for closing your Demat account.
- All account holders’ involvement is required for any transaction.
- If someone dies, then the ownership is shifted to another Demat owner, and if everyone dies, then the nominee will get all the Demat holdings.
Conclusion
A Demat account is a must for trading in the share market. With a Demat account, you sell or hold different types of financial assets. Opening a joint online Demat account can be beneficial for your business, family, or other purposes. You need to understand the needs and criteria before going for a joint account. Nonetheless, you can also open a free Demat account with Share India and start your investment journey from today itself.