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

A sole holder who nominated his minor grandson dies while the grandson is a minor. Which arrangement is correct for dealing with the nomination?

For a minor nominee, the holder must name a guardian at the time of nomination. That guardian acts on behalf of the minor to claim the securities on the holder's death. The nomination is valid, and the DP does not appoint the guardian itself.

  1. ANomination in favour of a minor is invalid and ignored
  2. BThe securities are transmitted only after the minor turns 18 with no one acting
  3. CA guardian must be named at the time of nomination to act for the minor nominee in the event of the holder's deathCorrect
  4. DThe DP itself appoints the guardian

Explanation

When a nominee is a minor, the holder must specify the name and details of a guardian who will act on behalf of the minor nominee on the holder's death. Without that, the DP cannot decide on its own. Nomination in favour of a minor is valid.

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