What is a Joint Demat Account? Key features, Advantage, Documents Required

Investments play an important role in financial planning. From attaining financial freedom to securing your family’s financial future, investing can help you achieve these goals. As a family, you might often make collective investment decisions, and a joint demat account can help make your investment journey easier.

A demat account is required to invest in securities, and a joint demat account can offer several benefits to families. In this article, we will understand what a joint demat account is, how to open one, and its benefits.

What is a Joint Demat Account?

To understand what a joint demat account is, let’s first take a look at what a demat account is.

A dematerialised (demat) account is an account used to store securities in an electronic format. Instead of holding physical securities like share certificates, these securities are stored digitally in a secure centralised repository.

Typically, a demat account is opened by an individual. However, similar to a bank account, a demat account can also be jointly held by up to three individuals. A joint demat account is usually opened by families, spouses, or even business partners due to its convenience of collectively managing investments.

The joint demat account gives each holder access to the holdings and all holders have to validate the transactions in the account. The individual who opens the joint demat account is the primary holder of the account while the additional individuals are known as the secondary holders.

Key Features of a Joint Demat Account

Now that we’ve understood what a joint demat account is, let’s look at some of the key features of the account in greater detail.

Operational Control

In a demat account, all account holders have equal rights and access to the demat account. All holders can contribute and withdraw funds from the demat account. However, only the primary holder of the joint demat account has operational control unless the other members are granted a power of attorney.  

KYC Procedure

To open a joint demat account, all the members need to complete the know-your-customer (KYC) process. All members need to submit the necessary documents such as PAN or Aadhar and meet the eligibility to be a joint account holder.

Joint Instruction for Transactions

For the transactions that take place in a joint demat account, all account holders need to validate and verify the transactions.

Transmission after Death of Primary Holder

In the unfortunate circumstance of the death of the primary holder, the ownership is transferred to the surviving joint holders. If all the joint holders of a demat account pass away, the ownership of the account is transferred to the appointed nominee.

Advantages of Opening a Joint Demat Account

A joint demat account offers several advantages for spouses, families, or business partners. Here are some of the key benefits of opening a joint demat account:

Simplifies Joint Investments

A joint demat account is ideal for making collective investments. Instead of making investments through separate demat accounts for each individual, the investments can be made through one single demat account.

Shared Ownership

A joint demat account gives equal ownership and rights to each holder of the demat account. This is ideal for couples, families, and business partners who want to make collective investments.

Supports Investment Management and Planning

When more than one person is making an investment, tracking, and managing becomes a cumbersome process due to numerous demat accounts. A joint demat account solves this problem by simplifying the process of making and managing collective investments.

Succession Planning

Another benefit of a joint demat account is that it helps in succession planning and easy transmission of shares. In case one of the joint holders of the account passes away, the ownership is transferred to the surviving account holders or the nominee in the case of no surviving account holders.

Can a Joint Holder be added to a Demat Account?

Before opening a demat account, it is vital to know that a joint demat account option can only be selected during the account opening process. An individual demat account cannot be converted to a joint demat account. Although an individual demat account holder can add nominees to the demat account, the nominees will have no control over the demat account.

Documents Required to Open a Joint Demat Account

Given below are the documents required to open a joint demat account:

• Permanent Account Number (PAN) Card of all holders
• Address Proof/Aadhar Card
• Cancelled Cheque
• Passport-size photographs
• Signature Verification
• Nominee Details (optional)

Step-by-Step Process on How to Open A Joint Demat Account

Let’s take a look at how one can open a joint demat account:

Step 1: Pick a depository participant (DP) to open a demat account with. A DP is an intermediary that connects the investors to the depositories. Research the various DPs and understand the services, features, and costs before picking one.

Step 2: Fill out the joint demat account opening form. Fill in the required details of all the holders of the account.

Step 3: Complete the eKYC process. The KYC process can be completed digitally by submitting the KYC documents such as the PAN card and Aadhar card. All joint holders need to complete the KYC process.

Step 4: Upload the required documents such as the canceled cheque or bank statements. Details for a nominee can be submitted as well.

Step 5: Once the documents are submitted, an in-person verification (IPV) or video KYC is conducted. All joint holders need to complete this process.

Step 6: Once all the documents are reviewed and verified by the DP, the joint demat account is successfully created. After activation, credentials of the demat account will be shared with each joint account holder.

Conclusion

From couples to business partners, the importance of investing cannot be undermined. A joint demat account has made it convenient and easy to manage collective investments. Moreover, the process to open a demat account is straightforward and easy.