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Nomination of shares

RAKESH JAIN (RETIRED COMPUTER PROFESSIONAL) (369 Points)

09 October 2009

Dear All,

I plan to make nomination for my demat account which includes shares from a few companies.

After making nomination for my demat account (in favour of single individual), do I need to make nomination for shares for each company too (in favour of same individual) whose shares are included in my demat account or nominating demat account is enough?

Thanking you. Best regards, RAKESH

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8 Replies

CA. Shwetank Vats (Chartered Accountant) (653 Points)
Replied 09 October 2009

I am also want to know reply of this Q.

RAKESH JAIN (RETIRED COMPUTER PROFESSIONAL) (369 Points)
Replied 11 October 2009

Dear Shwetank Vats,

I sent the same query to my DP (HDFC Bank) & their reply was as below. Kindly confirm this with your DP or some other source & kindly inform me.

Once the nominee details is updated in your demat account, the individual will be nominee for the shares available in your demat account. Therefore there is no need to separately inform each company of the demat account nominee.

Best wishes, RAKESH

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 17 October 2009

As the Demat Concept came into existence, the member is not directly a member in the company. The shares of the company are held in the name of the Deopsitory, e.g. in India, NSDL and CDSL. However, the shareholder becomes the beneficial holder of the shares. The depositories make a list of members for a particular corporate action when due, e.g. dividend, bonus shares, split, AGM, etc. and the company takes the action on same list provided.

Further, as mentioned above, the depositories have a list of shareholders of all companies.

in the demat concept, all the shares of a shareholder are held with depository. So, the things such as nominations, electronic fund transfer mandate, etc. is handled by the depository, and there is no need to inform separately to the company. if you inform the depository about the nomination, and it is registered, the same is applicable to all the shares held in the demat account.

Regards,

CA. Amol G. Kabra

RAKESH JAIN (RETIRED COMPUTER PROFESSIONAL) (369 Points)
Replied 18 October 2009

Dear Amol,

Thank you for your reply. This raises one more question. Suppose I have shares of 10 companies & I want to nominate my son for shares of 5 companies & my daughter for shares of remaining 5 companies. How do I do this? Can I have 2 demat accounts with same bank? If not, can I have one demat account with one bank & another demat account with another bank. Either way, if I have 2 demat accounts, then I can have shares of 5 companies in one demat account & shares of remaining 5 companies in other demat account. Then I can nominate my son for first demat account & my daughter for second demat account? Is this possible?

Thanking you. Best regards, RAKESH

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 20 October 2009

Dear Rakesh,

there is no need to have two different demat accounts. Mention any body's name in the demat account nomination. Further, if you want to nominate the son as well as daughter, make a will in that regard. The will shall prevail over the demat nomination. so no need to get so complicated about this by opening two demat accounts.

Regards,

CA Amol G. Kabra

RAKESH JAIN (RETIRED COMPUTER PROFESSIONAL) (369 Points)
Replied 20 October 2009

Dear Amol,

Thanks for your reply.

I was thinkink, writing names of companies for whose shares one wants to make one person nominee & names of other companies for which one wants to make other person nominee will be more complicated than opening 2 demat accounts. Moreover, you may nominate the persons today but when will be the best time to write will be difficult to predict & possibly by the time one's will become effective (i.e. after his/her death) the share holdings might change. So, it is difficult to keep will uptodate and at par with share holdings. Kindly let me know what are the complications of maintaing 2 demat accounts?

Thanking you. Best regards, RAKESH

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 20 October 2009

there is no as such complications for maintaining two demat accounts. but as i said Will shall be a simpler method. you need not mention the names of the companies in the will. the same can be nominated in the will in the following manner.

" Investment in Shares: The investment in shares standing in my name shall be divided in equal of in nearly equal proportion to my son Mr. X and my daughter Ms.Y."

this is the case where you want to divide the shares equally. In case you want to divide in different proportion, mention it as you want. It may happen that at a specific point of time the holdings in the two demat account are not as you wanted to divide among the children. it will require efforts to maintain the shares in your desired ration all the time. so, if there is only one demat account, it will not require much efforts to maintain them in the ratio you desire.

After all, this is my personal opinion. Your opinion or any body else's opinion may differ..

Regards,

CA Amol G. Kabra