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

Nomination Facility for Demat Accounts: Rules and Exam Points

Updated 11 October 2026

Nomination lets an account holder name a person who receives the securities in the demat account if the holder dies. Only individuals can nominate. A minor can be a nominee, through a guardian. Up to three nominees are allowed, with percentage shares. Holders must either nominate or formally opt out by declaration.

Understand Nomination Facility for Demat Accounts

A nomination is an instruction by the account holder naming who will receive the securities after the holder's death. It makes it simpler for the nominee to claim the holdings. Without it, the family may have to produce more documents, such as legal heir proof, before the securities are moved.

Only an individual can nominate. A non-individual, such as a company, trust, society or HUF, cannot. The facility covers individual holders, including a sole holder or joint holders. In a joint account, the nomination is made by all joint holders together. On the death of one joint holder, the surviving holder(s) continue to hold the securities. The nominee acquires rights only after the last joint holder dies.

A nomination cannot be made for a minor's demat account in the minor's name. A minor cannot nominate, and the guardian cannot nominate on the minor's behalf. Do not mix this up with a minor being a nominee, which is allowed.

A nominee is usually an individual, and exam questions focus on individual nominees. A minor can be a nominee. In that case the holder must name a guardian who acts for the minor, and the guardian's details are recorded. A nominee does not become the owner by right. The nominee receives the securities as a person entitled to take them, and must hold them in line with law and the will or succession rules that apply.

The holder can name more than one nominee, up to three under SEBI's nomination framework. The holder must state the percentage share of each nominee. The shares must add up to 100%. Do not assume any default split. State the shares clearly.

SEBI's rules require account holders to either give nomination details or give a declaration opting out. The declaration can be given physically (signed) or online through e-sign or other authentication. SEBI has relaxed the consequences of not doing this for existing accounts, so a non-compliant account is not frozen. The opt-out must be explicit and recorded in the DP's records. The holder can change or cancel the nomination later, as covered in the related topics. Exam questions test who can nominate, who can be a nominee, the number of nominees, the minor rule and the opt-out rule.

Key formulas to remember

Who can nominate: Only individuals (sole or joint holders); Companies, trusts, HUFs, societies and other non-individuals cannot nominate. A nomination cannot be made for a minor's demat account in the minor's name, because a minor cannot nominate.
Maximum nominees: Up to 3 nominees per account; This is the limit under SEBI's nomination framework. The holder must state the percentage share of each nominee. Total of shares = 100%.
Minor as nominee: Minor nominee → guardian details required; A minor can be a nominee. The guardian acts for the minor.
Joint accounts: All joint holders make the nomination together; If one joint holder dies, the surviving holder(s) continue to hold the securities. The nominee acquires rights only after the last joint holder dies.
Opt-out: Give nomination details OR a declaration opting out; The declaration can be physical (signed) or online through e-sign or other authentication. The choice must be explicit and recorded by the DP.

How to solve Nomination Facility for Demat Accounts questions

Use this order for any question on nomination in a demat account.

1Identify the account holder type. Is the holder an individual, or a company, trust or HUF? Only individuals can nominate. A nomination cannot be made for a minor's demat account in the minor's name.
2Check if the account is sole or joint. For joint accounts, all holders make the nomination together. If one holder dies, the survivors continue to hold the securities, and the nominee acquires rights only after the last joint holder dies.
3Check the nominee. Is the nominee an individual? If the nominee is a minor, look for guardian details.
4Count the nominees and check the share. There can be up to three nominees, and shares must total 100%.
5Check whether the holder chose to nominate or to opt out. Both options need an explicit record, either physical (signed) or online through e-sign or other authentication.
6Match the facts with the option that fits the rule exactly. Reject options that add extra conditions or wrong limits.

Quickest way: Five-point nomination check

When to use it: Use it when a question gives a short scenario and four close options.

Who nominates? Individual only, and not for a minor's account in the minor's name.
How many nominees? Up to three.
Minor nominee? Allowed, with a guardian.
Joint account? All nominate together. Survivors keep the securities, and the nominee claims only after the last holder dies.
No nominee wanted? Explicit opt-out declaration, physical (signed) or online.

Common mistakes in Nomination Facility for Demat Accounts

Saying a company or HUF can nominate.
Students assume any account holder can use the facility.
Fix: Remember that nomination is only for individuals. Non-individual accounts do not get it.
Saying a minor cannot be a nominee.
Students mix this with the rule that a minor cannot hold certain accounts or sign documents.
Fix: A minor can be a nominee, with a guardian named. The minor cannot act alone. Note that a minor cannot nominate for the minor's own demat account.
Allowing any number of nominees.
Students forget that the limit is set by SEBI.
Fix: Remember three as the maximum, with shares adding up to 100%.
Thinking the nominee gets securities while a joint holder is alive.
Students treat nomination as effective after the first holder's death.
Fix: In a joint account, all joint holders make the nomination together. If one joint holder dies, the surviving holder(s) continue to hold the securities. The nominee's rights arise only after the last joint holder dies.
Treating silence as opting out.
Students think an account with no nominee means the holder declined.
Fix: Opting out needs an explicit declaration, given physically (signed) or online through e-sign or other authentication. Not filling the form is not an opt-out.

Worked examples

Example 1

Mr. Rao holds a demat account in his sole name and wants to nominate his 10-year-old daughter and his wife in equal shares. Which statement is correct?

Show the solution

Mr. Rao is an individual, so he can nominate.
A minor can be a nominee, so his daughter is eligible.
Because the daughter is a minor, a guardian must be named for her.
Two nominees are within the limit of three.
Equal shares mean 50% each, which total 100%.

Answer: The nomination is valid. The daughter can be a nominee if a guardian is named, and the shares are 50% each.

Example 2

A private limited company wants to add a nominee to its demat account. What is the position?

Show the solution

Check the holder type. The company is a non-individual.
Nomination is available only to individuals.
So the company cannot nominate, even with a board resolution.
Securities of the company would be dealt with under its own legal rules.

Answer: The company cannot nominate, because only individual account holders can use the nomination facility.

Exam tips

Expect direct questions on who can nominate, and the answer is individuals only.
Watch for options that say a minor cannot be a nominee. Reject them.
Remember three nominees and a 100% share total. Options with other numbers are traps.
For joint accounts, look for the words all joint holders. That is the correct rule.
Read for the word opt-out. The valid route is an explicit declaration, signed or given online by e-sign, not silence.

Practice questions from Functions of Depository Participant - Transmission and Nomination

Nomination Facility for Demat Accounts: frequently asked questions

Can a minor be a nominee in a demat account?

Yes. A minor can be a nominee. The holder must give the guardian's details, and the guardian acts for the minor.

How many nominees can I add to a demat account?

You can add up to three nominees. You must state the share of each, and the shares must total 100%.

Do I have to nominate for my demat account?

You are required to either give nomination details or give a declaration opting out. The declaration can be given physically (signed) or online through e-sign or other authentication. The choice must be explicit. SEBI has relaxed the consequences for existing accounts, and a non-compliant account is not frozen.

Can a company or HUF nominate in a demat account?

No. Only individuals can nominate. Non-individual holders such as companies, trusts and HUFs cannot use the facility.