A demat account can be opened in the name of a minor to hold investments across securities, including shares, debentures and mutual funds. A minor is an individual who has not attained the age of 18. The formalities of opening the account and operating it will be conducted by the guardian on behalf of the minor. The guardian will be either the natural guardian, i.e. mother or father, or a court-appointed guardian.
The procedure for opening an account in the name of a minor is similar to that of opening a regular demat account. The standard account opening form has to be used for this purpose. The KYC formalities of establishing identity and address has to be completed for both the minor and the guardian. All the documents need to be signed by the guardian. The date of birth of the minor has to be mandatorily provided and supported by documentary proof of age for account opening. The PAN cards of the minor as well as the guardian have to be submitted. A demat account in the name of a minor cannot have a joint holder. The account can only hold the securities on delivery basis and cannot be used for intraday trades in equity, trading in equity derivatives and currency derivative trading.
In the event of the death of the guardian, a notarised copy of the death certificate has to be provided. The demat account of the minor will be then frozen till the documentation required to appoint a new guardian is complete.
On attaining majority, the erstwhile minor has to submit a new KYC and account opening form, which need to be completed in all respects. The account holder will be provided a copy of the rights and obligations document and has to acknowledge receipt of the same. The guardian’s details will be deleted from the account and replaced by the demat account holder’s signature. If the word minor appears in the name under which the original account was opened, then the existing account has to be closed and a new account opened. The depository participant will transfer the holdings in the original demat account to the new account.