Demat Account

Can a Minor Open a Trading Account and Start Investing?

• First of all, we need to be aware that, Children below the age of 18 years in India are considered a Minor.

• A trading account and a Demat account can be opened in the name of a minor. The account is operated by a guardian till the minor becomes a major. Guardian has to be the father or, in his absence, the mother.

• In the absence of both father and mother, the court can appoint a guardian.

• The guardian is legally entitled to open, operate and even close the bank account, Demat account, and trading account in the Minor's name.

• 2 KYC Application Forms must be filled, i.e., one for the guardian and another for the Minor (to be signed by a guardian).

What Are the Points To Be Noted About Minor Demat & Trading Account?

• The legal guardian must provide all the documents and fulfil the KYC norms.

• PAN Card of legal guardian has to be submitted to open Demat or trading account.

• The date of birth certificate is required for a minor child.

• When a minor turns major, the account becomes inoperative. A new separate account has to be opened in this case.

• Demat holdings can be transferred from a minor account to a significant account.

• If paper shares are held jointly with a minor, they must be transferred to the minor and then to the Demat account in the Minor's name.

• A 3-in-1 Account (Bank + Trading + Demat Account) can be opened in the name of a minor.

What Are the Limitations of a Minor's Trading Account?

• Minor Trading Accounts are allowed only to invest in the stock market (Equity Delivery Trades only).

• They are not allowed to trade in Equity Intraday / Equity Derivative Trading (F&O) / Currency Derivatives (F&O) / Commodity derivatives

• Minor can't be a joint holder in a Demat account. A joint account cannot be opened with a little in it as one of the account holders. A minor account should be a separate account.

What Happens to a Minor Demat Account When the Little Becomes Major?

There are two options:

A. Close Minor Demat Account and open a new Demat Account

The existing minor account can be closed, and a new Demat account can be opened in the name of the Minor turned significant.

All securities in the minor account can be transferred to the new Demat account.

B. Convert Minor Demat Accont to Major Demat Account

The existing minor account can still be used. Little turned major has to sign a new agreement with the DP and complete all formalities required for opening a new Demat account.

Guardian details entered earlier have to be deleted.

General Q/A Related to Minor and IPO

Does Minor need a Demat account to invest in an IPO?

Yes, a Demat account is mandatory to apply in an IPO. Minor can still use the bank account of any family member to apply for an IPO.

Can a minor apply for an IPO?

Yes, minors can apply for IPO shares as long as they have a Demat account.

Does an IPO Minor need a Demat account to invest in an IPO?

Yes, a Demat account is mandatory to apply in an IPO. Minor can still use the bank account of any family member to apply for an IPO.

https://www.youtube.com/watch?v=gNb-iMJGsaY&feature=emb_imp_woyt