NISM-Series-VI: Depository Operations · Functions of Depository Participant - Transmission and Nomination

Changing, Cancelling and Effect of Nomination in a Demat Account

Updated 11 October 2026 · Fact-checked

A demat holder can change or cancel a nomination at any time by submitting a fresh nomination or cancellation form, witnessed as required. The new form replaces the old one once the DP accepts it. After the holder's death, the nominee becomes entitled to the securities to the exclusion of all other persons (Section 9A, Depositories Act, 1996).

Understand Changing, Cancelling and Effect of Nomination

A nomination is the holder's written choice of who will receive the securities in the demat account after the holder dies. It lets the DP act quickly and avoids the need to find out who the legal heirs are.

The holder is not locked in. The holder can change the nominee by making a fresh nomination, or cancel the nomination without naming anyone new. A later valid nomination replaces the earlier one. Only the account holder can do this, and it is done in writing to the DP on the prescribed form.

The effect of nomination applies only after death. During the holder's life the nominee has no right over the securities. The holder keeps full control and can trade, transfer or pledge them.

After death, Section 9A of the Depositories Act, 1996 applies. The nominee becomes entitled to the securities to the exclusion of all other persons, unless the nomination has been varied or cancelled. The DP transmits the securities to the nominee's own demat account. If there is no nominee on record, transmission follows the legal heir route.

For joint accounts, the nominee's right arises only when all the joint holders have died. While any joint holder is alive, the survivor deals with the account. Exam questions use this contrast often: the nominee has no right in the holder's lifetime, but is entitled after death to the exclusion of all other persons.

Key formulas to remember

Who can change or cancel: Only the account holder(s) can change or cancel a nomination; In a joint account, all joint holders must sign the request. The nominee or a legal heir cannot do it.
Effect of a new nomination: Fresh valid nomination ⇒ earlier nomination stands cancelled; The latest accepted nomination is the one that counts.
Cancellation: Cancellation of nomination ⇒ no nominee on record; Cancellation needs no new nominee. Transmission then follows the legal heir route.
Timing of effect: Nominee's right arises only on the death of the holder (all joint holders in a joint account); During the holder's life the nominee has no rights over the securities.
Nominee vs legal heir: Valid nominee on record = entitled to the securities to the exclusion of all other persons (Section 9A, Depositories Act, 1996); no nominee = legal heir route; This holds unless the nomination has been varied or cancelled. Legal heirs come in when there is no nominee on record.

How to solve Changing, Cancelling and Effect of Nomination questions

Use this method for any question on changing, cancelling or the effect of nomination.

1Identify the stage: is the holder alive (change or cancel) or dead (effect of nomination)?
2If alive, check who is asking. Only the holder, or all joint holders together, can change or cancel.
3Check the action: a fresh nomination replaces the old one. Cancellation leaves no nominee.
4If the holder is dead, check whether the account is single or joint. In a joint account the nominee's right arises only after all holders have died.
5Decide whose right is being tested: if a valid nomination is on record, the nominee becomes entitled to the securities to the exclusion of all other persons. The legal heir route applies only when there is no nominee.
6Match with the options and eliminate any that say the nominee can change the nomination, or that the nominee has rights while the holder is alive.

Quickest way: Alive or dead test

When to use it: Use this when options look similar and you have little time.

Alive: the holder controls everything. The nominee has nothing yet.
Dead: the nominee on record becomes entitled to the securities to the exclusion of all other persons (Section 9A).
Joint account: wait until the last holder is dead.
No nominee on record: the legal heir route applies.
Reject any option that gives the nominee a right while the holder is alive.

Common mistakes in Changing, Cancelling and Effect of Nomination

Saying legal heirs override a valid nominee after the holder's death
Students mix up the nominee with the succession route used when there is no nominee.
Fix: Under Section 9A of the Depositories Act, 1996, the nominee becomes entitled to the securities to the exclusion of all other persons, unless the nomination was varied or cancelled.
Thinking the nominee has rights while the holder is alive
The word 'nominee' sounds like a co-holder.
Fix: Nominee rights arise only after death. The holder has full control until then.
Thinking the nominee can change or cancel the nomination
Students confuse the nominee with an authorised person.
Fix: Only the holder, or all joint holders together, can do this.
Assuming cancellation requires naming a new nominee
Students mix up change and cancellation.
Fix: Change means fresh nomination. Cancellation simply removes the nominee.
Applying the nominee's right when one joint holder dies
Students forget the survivorship position in joint accounts.
Fix: The nominee's right arises only after all joint holders have died.

Worked examples

Example 1

Mr. Rao holds a single demat account with Mrs. Rao as nominee. He later submits a fresh nomination form naming his son. Mr. Rao then dies. Who is the nominee on record, and what is the son's position?

Show the solution

Mr. Rao is alive when he submits the form, so he is entitled to change the nomination.
A fresh valid nomination replaces the earlier one, so Mrs. Rao's nomination stands cancelled.
On death, the son is the nominee on record.
The son can claim transmission of the securities to his own demat account. Under Section 9A of the Depositories Act, 1996, he becomes entitled to the securities to the exclusion of all other persons.

Answer: The son is the nominee on record. He becomes entitled to the securities to the exclusion of all other persons, as per Section 9A of the Depositories Act, 1996.

Example 2

A joint demat account has two holders, A and B, with C as nominee. A dies while B is alive. Can C claim the securities?

Show the solution

Check the account type: it is a joint account.
The nominee's right arises only when all joint holders have died.
B is alive, so B continues to deal with the account, and A's name is removed through transmission.
C has no claim at this stage.

Answer: No. C can claim only after both A and B have died.

Exam tips

Most questions test who is entitled after death. A valid nominee on record becomes entitled to the securities to the exclusion of all other persons (Section 9A, Depositories Act, 1996).
Read the account type first. Joint accounts change the answer on timing.
Watch for options that give the nominee power to change or cancel. These are wrong.
Do not guess if unsure. Negative marking applies to NISM-Series-VI at 25% of the marks of a question.

Practice questions from Functions of Depository Participant - Transmission and Nomination

Changing, Cancelling and Effect of Nomination: frequently asked questions

How do I change the nominee in a demat account?

Submit a fresh nomination form to your DP with the new nominee's details, signed by you (all holders in a joint account). The new valid nomination replaces the old one.

How do I cancel a nomination in a demat account?

Submit the prescribed cancellation form to your DP, signed by the holder or all joint holders. After acceptance, no nominee remains on record.

What is the difference between a nominee and a legal heir?

A nominee is the person chosen by the holder to receive the securities after death. Under Section 9A of the Depositories Act, 1996, a nominee on record becomes entitled to the securities to the exclusion of all other persons, unless the nomination is varied or cancelled. Legal heirs, under the will or succession law, come in through the transmission route when there is no nominee on record.

Does the nominee have any right while the holder is alive?

No. The nominee's right arises only after the holder's death. In a joint account it arises only after all joint holders have died.