Add Nominees To Secure Your Legacy!

When it comes to managing your trading and demat accounts, adding nominees is crucial for ensuring a smooth transition of assets in unforeseen circumstances; adding nominees to your trading and demat accounts is more than a legal requirement; it’s also a great way to protect your family’s interests and secure your investment.

Section 72 of Companies Act, 2013 provides for nomination by a holder of securities. SEBI, in a circular no. SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601, dated July 23, 2021, has informed that investors opening new trading and/or demat account(s) have the choice of either providing nomination or opting out nomination.

To get started, let’s start with – 

What is a Demat account?

A Demat account, short for “Dematerialized account,” is an account for holding and transacting securities in an electronic or digital form, eliminating the need for physical share certificates. It serves as an electronic repository for securities such as stocks, bonds, mutual funds, government securities, and other financial instruments.

The two main depositories in India are the NSDL and CDSL.

What is a Trading account?

A trading account is a type of account used by investors to buy and sell securities, such as stocks, bonds, derivatives, and other financial instruments, through a stockbroker or a registered trading member of a recognized stock exchange. It facilitates the execution of buy and sell orders, acts as an intermediary between the investor and the stock exchange, and enables transactions in the stock market.

Is it necessary to have nominees?

In the context of stock trading accounts, adding nominees serves as a way to designate individuals who would inherit or take over the account in case of the account holder’s demise.

The role of adding nominees to a stock trading & demat account is primarily for estate planning and ensuring that the account holder’s assets are transferred to the intended beneficiaries smoothly and efficiently in the event of their death.

Is there a limit to how many nominees can be added?

As per regulatory requirements, Paytm Money allows users to add up to three nominees for their demat account. Users can add these nominees while opening their demat account with Paytm Money or afterwards from the Account Details section. The nominee information provided by the user is updated in CDSL by Paytm Money. 

For nominees, what information is required?

Depending on the age of the nominees, the following mandatory information has to be given:

1. Name of the Nominee
2. Share (%age ownership of assets in the event of applicant’s death)
3. Relationship with the Applicant
4. Address of the Nominee
5. Date of Birth
6. Name of Guardian (in case of minor nominee(s), less than 18 years of age)
7. Address of Guardian(s)
8. Relationship of Guardian with Nominee

Note: The total percentage allocation for all nominees must equal 100%. 

Furthermore, Paytm Money designates the first nominee as the residual security holder by default. This means that in case the stocks are divided among the nominees based on the specified percentage allocation, and there is a remainder, that remainder will be automatically allocated to the first nominee. This ensures that the total allocation always adds up to 100% and leaves no unallocated portion.

Process to add Nominee(s)

A user can add nominees while creating an account or even afterwards from the Stocks section.

Steps:

1. Open Paytm Money app
2. Go to ‘Stocks’ section
3. Click on ‘Account’ icon on bottom right
4. Click on ‘Account Details’
5. Add/Delete nominees

Important: The deadline for nomination of eligible trading and depository accounts has been extended for existing account holders.

SEBI had mandated providing choice of nomination details for certain eligible trading and demat account holders latest by March 31, 2023 failing which the trading accounts shall be frozen for trading and demat account shall be frozen for debits. This deadline is extended to September 30, 2023 as per this circular.

Process for nominees to claim securities in case of death of Demat Account holder:

The following physical documents need to be sent to the Bangalore office of Paytm Money:

• CMR copy: If the nominee is a Paytm Money user, then Paytm Money can arrange the CMR copy for the nominee. If the nominee is registered with some other stock broker, then the nominee will arrange the CMR copy herself along with a physical stamp of the stock broker on that CMR and his own signature.
• Death certificate – Either original or a Xerox copy. If it is a copy, then it must be notarized.
• Properly filled Transmission Request Form (Available on https://www.paytmmoney.com/stocks/customer/download-center)
• Nominee’s self-attested ID (Self-signed copy of Aadhaar)