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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Operations

A joint demat account is held by A (first holder), B and C with the operation mode 'jointly'. The first holder A dies. Which statement is correct for the continuing account operations?

Surviving holders must apply for transmission with a death certificate and related documents, after which the account is dealt with under transmission procedures. There is no automatic closure, sale or informal takeover by one holder, and heirs cannot receive securities without documents.

  1. AThe surviving holders can request transmission and the account is handled per transmission procedures, with the DP not allowing debit on A's sole signatureCorrect
  2. BB alone may continue to sign all DIS as the new first holder without any formalities
  3. CThe account becomes automatically closed and shares are sold
  4. DThe DP must transfer all securities to A's legal heirs immediately without documents

Explanation

On death of a holder, the DP requires the death certificate and transmission request from survivors; the securities are transmitted to the surviving holders per the process. Operations continue only after the transmission formalities, and no automatic sale or closure occurs. Transfer to heirs without documents is not permitted.

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