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

A demat account is held jointly by Ramesh, Suresh and Mahesh in that order. Ramesh, the first holder, dies. Which statement correctly describes how the DP should treat the account?

Suresh, the surviving holder, becomes the first holder and the account continues in the names of the survivors. On a joint holder's death, securities are transmitted to surviving holders rather than to the deceased's legal heirs, and the DP neither sells nor rematerialises them.

  1. ASuresh, the surviving second holder, becomes the first holder after transmission and the account continues in the names of the survivorsCorrect
  2. BThe account is frozen permanently and securities must be sold by the DP
  3. CThe securities automatically go to Ramesh's legal heirs, ignoring the surviving holders
  4. DThe account is closed and securities are rematerialised

Explanation

In a joint account, on death of a holder the securities are transmitted to the surviving holders, who move up in the order of names. Legal heirs of the deceased do not get the securities directly while joint holders survive. The DP does not sell or rematerialise securities on its own.

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