Quick Definition

Demat account nominee rules are SEBI regulatory guidelines requiring single-holder Demat and mutual fund account holders to make an explicit choice during account setup and maintenance: either register at least one nominee, or formally declare an opt-out. The goal is to ensure that financial assets transfer smoothly to designated individuals after the account holder’s death – rather than getting tied up in legal proceedings or flowing into unclaimed asset pools.

What Are the Demat Account Nominee Rules for 2026?

Effective today, anyone opening a new single-holder Demat account or mutual fund folio must make a clear nomination decision before the account can be activated. The form can no longer leave the nomination section blank or unaddressed. You nominate someone, or you formally opt out. Both choices are fully compliant – the rule just eliminates the third option of ignoring the question entirely.

For existing accounts that don’t yet have a nominee on record, the approach is different from earlier regulatory drafts that threatened account freezes. SEBI clarified that existing Demat accounts will not be frozen for non-compliance. Instead, brokers and depositories must issue reminders twice per year through SMS, email, and app notifications until the investor records their decision. Trading continues uninterrupted. The reminders continue until you act.

This is a meaningful shift from earlier versions of the regulation and removes the anxiety that many existing investors were feeling about potential account disruptions.

Understanding how a Demat account works can also help investors understand where nomination details fit into account ownership and management.

If you are new to investing, it is also useful to understand how to buy shares online in India and how the Demat and trading accounts work together.

Why SEBI Made Nomination Mandatory

SEBI’s January 2025 circular addresses the growing volume of unclaimed assets in the Indian securities market caused by investors passing away without leaving any nomination on record. With no nominee, families have no direct path to claim the holdings. The depository cannot act without a succession certificate from a civil court.

To stop this, SEBI made it compulsory for every demat account holder to either register a nominee or submit a signed declaration explicitly opting out of nomination. Accounts that did neither were frozen for debit transactions.

Current Rules: SEBI Circular No. SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/01650 Dated January 10, 2025

The circular came into force on March 1, 2025, with full implementation spread across three phases running through September 1, 2025. Here are the rules currently in effect:

Nominee limit: Up to 10 nominees per demat account

Information required for each nominee:

Name and relationship with the account holder
Identity number: PAN, last 4 digits of Aadhaar, or driving licence number. Document copies are not required, only the number. For NRI, OCI, or PIO account holders, a passport number is also acceptable
Date of birth: required only if the nominee is a minor
Address, contact number, and email are part of the form, but are optional fields

Share allocation: Specify the percentage of holdings each nominee will receive. If you do not specify percentages, assets are divided equally among all nominees. Any odd lot or fractional percentage goes to the first nominee listed on the form

Minor nominees: You may optionally name a guardian. The guardian manages the assets until the nominee turns 18

Power of Attorney holders excluded: A person holding Power of Attorney for your account cannot be named as a nominee

New accounts: All new demat accounts opened after March 1, 2025, must include a nomination or signed opt-out declaration at the time of account opening

Transmission process: On the account holder’s death, the DP transfers holdings to the nominee upon receiving a death certificate and completion of the nominee’s KYC update. No affidavits, indemnities, undertakings, attestations, or notarization are required

Credit transactions in frozen accounts: Even if a demat account is frozen for debits, dividends and corporate action credits continue to be received. This provision took effect from September 1, 2025, under Phase III

Joint accounts: On the death of one joint holder, assets pass to the surviving holder by name deletion. The surviving holder does not need to submit fresh KYC for this transmission. The nominee only becomes relevant when all joint holders pass away simultaneously

SEBI Amendment Circular Dated February 28, 2025

SEBI issued a follow-up circular (No. SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/0027) on February 28, 2025, to clarify and amend parts of the January 2025 circular after receiving stakeholder feedback.

The key change was splitting implementation into three phases instead of a single March 1, 2025, cutover.

Phase	Date	Provisions Covered
Phase I	March 1, 2025	Basic nomination, transmission rules, and account freezing
Phase II	June 1, 2025	NRI KYC provisions, nominee empowerment for incapacitated investors, opt out process
Phase III	September 1, 2025	Credit transactions in frozen accounts, opt-out mechanisms through DPs

Other amendments included clarifications on joint account signing rules and confirmation that any odd lot after percentage division goes to the first nominee listed.

Correction note for readers: Several blogs and broker support pages incorrectly call the SEBI-prescribed form “Annexure 1A”. The correct name, as stated in the January 2025 circular and the February 2025 amendment, is Annexure A.

What SEBI Is Proposing in March 2026

These are proposals under public consultation. They are not in effect as of April 2026.

SEBI released a consultation paper on March 17, 2026, with the public comment period closing on April 7, 2026. The proposals came after industry feedback showed that the detailed KYC requirements from January 2025 were creating high audit costs, legal dispute risks, and investor dropout during account opening.

Key proposals in the consultation paper:

Nominee cap: Reduced from 10 to 4, aligning with banking norms. Industry data showed most investors use three or fewer nominees

Mandatory fields: Only the nominee’s name and relationship with the account holder would be required. All other fields, including address, ID number, and contact details, would become optional

Opt-out process: Instead of a signed declaration, investors could opt out through a digital consent screen during account opening that explains the consequences of not nominating

Incapacitation clause removed: The 2025 provision allowing nominees to manage accounts on behalf of physically incapacitated investors would be removed. The standard Power of Attorney mechanism would handle those situations instead

A Real Example

Sunita, 58, holds Rs 12 lakh worth of shares across three companies in her demat account. When she opened it, she registered her daughter (50%) and her son (50%) as nominees with the correct Aadhaar details.

After Sunita passes away, her children visit the broker with her death certificate and their own KYC documents. The DP processes the transmission and transfers the shares to both children within three to four weeks. No court, no succession certificate, no legal fees.

Her neighbour passed away the same year with no nominee registered. His family had to apply to a civil court for a succession certificate. The process took over a year.

The difference between these two situations came down to one form filled in correctly.

How to Add or Update a Nominee in Your Demat Account

Online Process

Log in to your broker’s platform or app
Navigate to Profile or Account Settings and select Nomination
Click Add Nominee
Enter the nominee’s name, relationship, identity number (PAN, Aadhaar last 4, or driving licence number), date of birth if a minor, and share percentage
If adding multiple nominees, confirm all percentages total 100%.
Complete verification using your Aadhaar-linked OTP or electronic signature
Submit and save

Processing time: 24 to 48 hours

You can also update your nomination directly through the depository portals without going through your broker:

CDSL account holders: Log in at easiest.cdsl.com
NSDL account holders: Visit nsdl.co.in/dpmplus.php, enter your DP ID, Client ID and PAN, then verify using OTP

Broker navigation paths:

Broker	Platform	Path to Nomination Section
Alice Blue	ANT Web	Log in at ant.aliceblueonline.com > App > Profile > My Account > Nominee > Add Nominee
Alice Blue	Mobile App	Login > Profile Icon (bottom right) > Settings > Nomination
Alice Blue	BOT Portal	bot.aliceblueonline.com > My Account > Nominee Details
Zerodha	Web (Console)	Console > Account > Nominees
Groww	Web or App	Profile > Nomination
FYERS	Web or App	FYERS Web or App > Nomination and Declaration
Upstox	Web or App	Profile > Account Settings > Nomination
CDSL (direct)	Portal	easiest.cdsl.com
NSDL (direct)	Portal	nsdl.co.in/dpmplus.php

Offline Process

Visit your Depository Participant’s branch
Request Annexure A, which is the SEBI-prescribed nomination form for both CDSL and NSDL accounts as per the January 2025 circular
Fill in the nominee’s name, relationship, and identity number. Add the date of birth if the nominee is a minor
Sign the form. If you use a thumb impression instead of a signature, two witnesses must also sign and provide their names and addresses
Submit the form. Document copies of the nominee’s ID are not required, only the identity number
Collect your acknowledgement receipt from the DP

Processing time: 5 to 7 working days

What Happens If Your Demat Account Is Frozen

If your account was frozen due to a missing nomination or opt-out declaration, here is what changes day to day:

Account Activity	Status When Frozen
Viewing your holdings	Allowed
Receiving dividends	Allowed (credits permitted under Phase III, from September 1, 2025)
Receiving bonus shares	Allowed
Buying new securities	Not allowed
Selling existing holdings	Not allowed

To unfreeze your account, submit your nomination or signed opt-out declaration to your broker or DP and request reactivation. Once the nomination is processed (24 to 48 hours online, 5 to 7 working days offline), the debit freeze is lifted.

Nominee vs Legal Heir: The Difference

Aspect	Nominee	Legal Heir
Who are they	Person named in your Annexure A form	Person entitled by will or succession law
Do they own the assets	No, they receive and hold as a trustee on behalf of the legal heirs	Yes, final legal ownership rests with them
How are they identified	Through your nomination form filed with your DP	Through a will, or personal succession law, where no will exists
Role after death	Receives assets from the DP	Claims ownership from the nominee
Can they be the same person	Yes	Yes

The SEBI nomination form itself states that the nominee holds assets “as trustee and on behalf of legal heirs”. If the nominee and legal heir are different people, the nominee must cooperate with the legal heir’s claim and has no right to retain the assets permanently.

Advantages of Naming a Nominee

Your family can claim holdings without going to court. A death certificate and nominee KYC update are the only documents required for transmission.
No affidavits, surety bonds, indemnities, or notarisation are required under the January 2025 SEBI rules.
You control how your holdings are distributed across up to 10 nominees in any percentage combination.
You can change or cancel your nomination at any time without restriction. The most recent Annexure A supersedes all previous nominations.
Your account stays active and is not frozen for debit transactions.

Where Complications Still Arise

Nominee predeceases the account holder: If your nominee dies before you and you have not updated the form, the account functions as if no nomination exists. Update nominations after any major change in family circumstances.

A nominee and a legal heir are different people: if a will assigns assets to someone other than your registered nominee, the legal heir can approach a court. The nomination form itself acknowledges that the nominee acts as trustee for legal heirs, not as the owner.

Joint account signing requirements: In a demat account held in “jointly” mode, all account holders must sign the nomination form. If one holder does not sign, the nomination is incomplete.

Incorrect identity number on the form: If the nominee’s PAN or Aadhaar’s last four digits are entered incorrectly, the DP may flag the transmission despite a nomination being in place. Verify all numbers before submitting.

Common Mistakes to Avoid

Skipping nomination at account opening: Under current rules, new accounts require nomination or a signed opt-out at the time of opening. There is no option to skip and return to it later.
Not updating after the registered nominee passes away: A nomination naming a deceased person has no practical value. It must be updated immediately with a new person.
Not updating after marriage: Many investors name a parent as a nominee before marriage and never revisit this. After marriage, check whether your nomination reflects your current intention.
Leaving percentage fields blank with multiple nominees: Assets are divided equally by default, and any odd lot goes to the first nominee on the form. If equal distribution is not your intent, specify percentages explicitly.
Not informing nominees: Filing Annexure A with your DP is only the first step. Your family needs to know they are registered as nominees, which broker you use, and where your demat account details are kept.

Who Needs to Act Right Now

Account holders who have not checked their nomination section since before March 2025: If you have not visited the nomination section since the compliance deadline, check it today.

Investors whose registered nominee has passed away: This needs immediate attention. The nomination must be replaced.

Married investors with a parent still listed as the sole nominee: This is the most common nomination oversight. Review it.

Joint account holders: Your surviving joint account holder takes priority over your nominee upon your death. The nominee only receives assets if all joint holders pass away simultaneously. Factor the above information into your nomination planning.

Senior investors with significant holdings: The higher your portfolio value, the more important it is that nominee details are accurate, current, and known to your family.

Conclusion

SEBI’s January 2025 rules removed the biggest obstacles families faced when claiming securities after an investor’s death. Affidavits, surety bonds, and notarisation are gone. A death certificate and nominee KYC update are enough. These rules only protect your family if a valid nomination is actually registered in your account.

Check your nomination status today via your broker app or directly through the CDSL Easiest portal or the NSDL portal. If the section shows a blank or lists an outdated name, update it using Annexure A. The online process takes 24 to 48 hours. The offline process takes 5 to 7 working days.