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

Mr. Rao, a minor's guardian, holds a demat account in the minor's name. The minor becomes a major. Which statement is correct about the account?

When a minor attains majority, the holder must give the DP fresh KYC and a specimen signature, and the account is converted into a normal account that he operates. The guardian's authority ends. The account is neither closed automatically nor operated by the nominee.

  1. AThe account must be converted by the holder submitting fresh KYC, specimen signature and new account details to the DP, and the guardian's operating authority endsCorrect
  2. BThe account continues to be operated by the guardian indefinitely
  3. CThe account is automatically closed and securities are sold
  4. DThe account can be operated only by the nominee

Explanation

On attaining majority the holder must submit fresh KYC and signature and the account is changed to a normal account operated by him. The guardian's authority ceases. Operation by the guardian cannot continue indefinitely, no automatic sale happens, and nominee has no operating rights while the holder lives.

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