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

Kavita opens a demat account and does not make a nomination. She is advised by her DP about nomination. Which statement about nomination in a demat account is correct?

A nominee is entitled to receive the securities on the death of the holder, and the holder may change or cancel the nomination whenever desired. The nominee has no ownership rights during the holder's lifetime, so registration of nomination does not transfer ownership.

  1. AA nominee has the right to receive the securities on death of the holder, and the holder may cancel or change the nomination at any timeCorrect
  2. BA nomination once made cannot be changed during the life of the holder
  3. CA nominee becomes owner of the securities immediately when the nomination is registered
  4. DA nomination can be made only by a minor holder

Explanation

Nomination lets the holder name a person to receive the securities on death, and it can be varied or cancelled by the holder at any time. The nominee has no ownership rights while the holder is alive. Hence the other statements are wrong.

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