If you have a demat account for the stock market and related investments, then you will now have to provide information about your source income in Know Your Customer (KYC) form. The failure to do so may result in the closure of your demat account after Saturday, July 31. Many brokerage companies are sending emails to their clients about the closure of accounts for non-disclosure of KYC details, including their income source.
Apart from this, the Securities and Exchange Board of India (Sebi) has also changed the rules regarding nomination which will be applicable from October. According to the circular issued by the market regulator, all trading members and depository participants will have to activate new trading and demat accounts with effect from October 1. They can do so once they get the nomination form. Account-holders will have to sign the nomination and declaration forms. In case the account holder is unable to sign and affix their thumb impression, the form will require the signature of a witness.
New rules for demat account from October
According to an order issued by SEBI, from October 1, those opening new trading and demat accounts will also get the option of nomination. However, this will be only an option, a trading account can be opened without being nominated. SEBI has also released a format for the nomination form. If an investor does not want to make a nomination while opening a demat and trading account, then she will have to give this information to SEBI.
Account will be closed if nomination is not filled
For this, you have to fill a ‘Declaration Form’. If you already have a demat account, then you will also be required to fill the nomination form by March 31, 2022. If you do not want the nomination facility, then you will have to fill a separate form for this. If someone does not fill the nomination or declaration form, then her account will be frozen.
Nominee’s share to be stated
Under the new rules, demat and trading account holders will have to specify to whom the shares in their account will be transferred if they die and that person will be made a nominee. If ever you want to change the name of the nominee, you can do so. But keep in mind that a maximum of three people can be nominated in a demat account. If two or more nominees have been appointed, the account holder will have to decide the share of all the nominees.