What is the nomination rule for demat accounts?

The nomination rule lets you name one or more people who will receive the shares in your demat account after your death. SEBI asks every account holder to either add a nominee or formally opt out of nomination.

A nominee is not automatically the legal owner. The depository transmits the shares to the nominee, who then holds them for the legal heirs as per your will or succession law. In practice, though, it makes the process far quicker for your family, because they avoid court papers just to get the shares moved.

SEBI’s revised framework, rolled out in phases from 1 March 2025, allows up to 10 nominees per demat account and mutual fund folio. You can set the percentage share for each. For example, a hypothetical investor with ₹10 lakh in shares could give 50% to a spouse and 25% each to two children.

The common mistake is ignoring the nomination screen during account opening, or adding a nominee and never updating it after marriage or a death in the family. Check your nomination status on your broker app once a year. Rules here get updated, so confirm the latest position on the SEBI or depository website.

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