How to open demat account in the name of a minor

To own shares of a company, one must have a demat account.

This can be opened with a depository participant and shares are held in paperless format.

A demat account can be opened in the name of a minor as well. The procedure is as follows.


Conditions
Demat accounts can be opened in the name of a minor child only by the natural guardian (parents) or court-appointed guardians

Form
Standard demat account opening forms must be filled by the guardian. Two KYC forms may have to be filled, one for the guardian and another for the minor (to be filled and signed by the guardian).

Documents and details
The guardian has to submit the required documents and fulfill KYC norms. The date of birth of the minor has to be mandatorily provided, with proof. PAN of the guardian and the minor may have to be submitted.

Operation of the account
The demat account of the minor can only be operated by the guardian, till the minor becomes major. No trading account can be linked to a minor’s demat account.

On becoming a major
The demat account will become inoperative when the minor turns 18. Then, a new demat account has to be opened. The erstwhile holdings can be transferred to the new account. The same account can be continued with, but a new agreement must be signed by the minor with the depository participant.

Points to note
1. A minor cannot be a joint holder in a demat account.
2. Shares in a minor’s demat account are typically received by way of gifts.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta