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How To Open Demat Account For Minors?

Interested in opening a demat account for your children? This article How to open a Demat account for minors is for you! 

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There is no particular age for us to learn about investments and get into them. The earlier we gain interest in it, the better it is as it allows us to understand it thoroughly and become a part of our life. If you are a parent wondering if you can open a Demat account in your kid’s name, this article will be very useful for learning everything.

HOW TO OPEN DEMAT ACCOUNT FOR MINORS?

Before we get into that, let us answer the most basic question.

What Is A Demat Account?

A Demat account is just a location where you can store your shares electronically. A Demat account converts shares from physical to electronic form, dematerializing them. When you open a Demat account, you’ll be given a Demat account number, which you can use to execute trades online.

A Demat account is very similar to a bank account in that it stores your funds and allows you to deposit and withdraw them. Your Demat account is also kept, debited, and credited with the assets. To open a Demat account, you don’t need any shares; in fact, your account may have no balance at all.

How To Open Demat Account For Minors?

For all those wondering whether or not you can open a Demat account for your child, the answer is yes. It is very much possible for you to open a Lifetime Free Demat Account for them; however, you have to do it a little differently than how you would do it with an adult. Don’t you worry; we will break it down for you. 

The first and foremost condition is that the whole process needs to be done and signed by the child’s parents or court-appointed guardian. While filling the form, the guardian needs to fill two KYC forms. One is for the guardian, and the other is for the child themself, and both these forms need to be signed by the guardian.

When it comes to the documents that have to be submitted, you will have to fulfill all the requirements in general, along with the child’s documents. You will have to fulfill all KYC procedures, and you also have to mention the date of birth of the child and proof. You will also need to submit your and your child’s PAN card. 

Both pros and cons of opening a Demat account for a minor are that they will not be allowed to operate the Demat account and can not link a trading account with it. The minor has to become a major in order to link the trading account with the Demat account. If you are a minor who is too excited about sharing and investments, you will have to wait a little longer to operate it with full freedom. 

What Happens Once You Become A Major?

Once a minor turns into a major, you either create a new Demat account or transfer all the holdings to the new account. Or else you can continue the safe account, but then the minor must sign a new agreement with the depository participant.

Key Takeaways

A minor can not be a joint holder in a Demat account, and all shares in that account can only be received as gifts, donations. It can also be transferred among the family members or something to implement the government. 

It is also important to note that a trading account in the name of a minor can be formed only for the purpose of selling securities owned by the minor in the way described above.

Trading can be quite tricky, and doing it as a minor could come with a lot of liabilities. There are so many regulations for a minor Demat account that the minor and the parent are protected in all situations. We hope this article about HOW TO OPEN DEMAT ACCOUNT FOR MINORS was helpful for you. All the best for all your future investments. 

About Mohanraj

Mohanraj is SmartFinder's Top Editor.  Have written over 700+ posts for SmartFinder with a team of tech experts. Passionate about technology, Mohan is keen on bringing the latest tech news to millions of internet users in India. Find him on Twitter and Linkedin.

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