demat account
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Why is having a nominee not relevant for a jointly held demat account?


Having a nominee is relevant for all the owners as the former will inherit the property in case the owner is deceased. The major depositories CDSL and NSDL have laid down the guidelines for determining how the account investments will be transmitted.

If there is a joint holder’s account, after the demise the account will become non-operation. This happens mostly in the case of depository participants when they are notified about the demise of the party. In order to transmit the demat account, the nominees need to open a new account especially by one joint holder.

In case of the demise of the sole holder and there is no information about the nomination, the transmission of assets will be done only after the confirmation of them as per the will. The competency mentioned in the details will also determine the relevance of succession.

If there is a surviving joint account holder on opening the new demat account, the transmission of investments will be made. The registration of nominees will determine the inclusion accordingly. The joint holders can also work on appointing new nominees as per the new demat account. The status of registered nominees will vary as well lm


If there are three joint holders of a demat account and one of them passes away, the investments will be transferred to the new demat account. However, if the Will of the dead person states otherwise, the demat account’s investments will be shared with the one who holds the will.

The surviving joint holders will however need to oblige what the will states and they can’t question it. The existing operating manuals will vary as well. They may however need to wait for a probate order after which they will be entitled for sharing the investments.

Lack of detail and relevance

One prominent case where the demat account joint holding will go invalid is if there is lack of relevance and rationality in the nominee. When you’re opening a joint demat account, it is crucial to comply with the NSDL Compliance Manual. The failure to do so can however lead to lack of percentage from the investment.

Often when an investor has more than one nominee, it is often possible to bequeath or divide the will and investments in equal halves. How much, each person’s shares will not be considered to be relevant. Nonetheless, it is necessary that the nominees are relevant and share the details.

NSDL and CDSL Policies

According to the NSDL Policy of 2017, “the facility for multiple nominations has been introduced.” The NSDL Compliance Manual further adds, “In demise of the account holder, transmission is required to be carried out in favour of the multiple nominees. In case of multiple nominees in the account, DP shall divide the securities at an ISIN level in proportion of share indicated at the time of nomination. In case the number of securities are not exactly divisible in the specified proportion in respect of particular ISIN, the DP shall divide the securities at the ISIN level to the extent, the securities are divisible and remaining indivisible securities, if any, shall be transmitted to the nominee whose name is recorded first in the form submitted to receive such indivisible securities.”

Furthermore, the CDSL Compliance Manual states, “Nominees (each nominee in case of multiple nomination) shall be the sole holder of the account. The DP shall ensure that the said nominee does not have any joint holders in this new account.”

The DP is responsible for ensuring the distribution of the will equally and split the securities accordingly. If there is a single holder for the demat account, they should ensure to register a nominee. The distribution of securities in this case will however vary significantly.

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