Heirs face uphill task claiming shares, MF units' ownership without nomination

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Subscribe to enjoy similar stories. We are in a phase of economic evolution where social security for oneself and family is achieved and shaped largely by individual financial planning and efforts rather than as a community mechanism, although a small part may be facilitated by government-backed mechanisms like the Employees’ Provident Fund, which does not cover the entire population. It is necessary to take steps to ensure our loved ones receive our assets after our demise without delay and confusion.

In last week’s edition of this two-part series, we delved into nomination in bank accounts and insurance policies. In this edition, we endeavour to understand the aspect of nomination in securities market investments. Gone are the days when, even for effecting an address change, an investor had to file documents with every single company he held investments in.

Now, with the facility of demat accounts, all an investor needs to do is file the documents with the depository participant. Once the address change is reflected in the demat account, it holds good for all investments held in that demat account. The same goes for legal heirs claiming the shares of a person after his demise.

Filing claims with the depository ensures that it applies to all investments held in the demat account. If a nomination is mentioned, the process of transmission of securities to the nominee is simplified – the death certificate of the investor along with the KYC (Know Your Client) of the nominee is sufficient. In the securities market, KYC is centralised too.