Do you know How to Open a Demat Account & want to open a Demat account? Find a procedure to start your first Demat account with all required guidelines. A Demat account generally allows you to keep a record of your shares in a digital form. The stocks in this account remain into electronic form, also known as dematerialized form.
The procedure of opening this account requires certain formalities. The Demat account works in a similar fashion of a bank account. However, instead of money, you hold securities or stocks in this account. You can open a D-Mat account even with zero shares.
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Procedure to How To Open a Demat Account :
The below procedure contains step-wise guidelines for opening a Demat account. The process is quite similar for all the depository participants in India.
- First of all, approach a DP (depository participant) who is an agent of depository. DP will give you an account opening form.
- Fill up the form and submit it along with the copies of your proof of address and proof of identity.
- Enter into an agreement with the DP as per the format prescribed under the Depositories Act. Do get a copy of the agreement with you with the details of the charges.
- As soon as your Demat account is opened by the DP, you should receive your unique demat account number. The account number is also known as the beneficial owner identification number.
Documents Required for Opening Demat Account:
The documents requirement for an individual and a corporate may differ. However, the basic documents required for demat account are following.
- Account Opening Form
- A valid proof of identity – PAN card, voter id card, passport, aadhar card
- A valid proof of address – passport, ration card, voter id card
To open a corporate demat account, following additional documents are also require.
- Photograph, proof of identity, proof of address, PAN number, and DIN number of the directors.
- Balance sheet copies for the last two financial years.
- Copy of the shareholding controls
- List of authorised signatories
- Copy of the resolution for investment in securities
- Copies of Certificate of Incorporation, MOA and AOA
While you submit the copies of the documents, make sure you self-attest.
Why Demat Account is Important :
A Demat account is very important from many perspectives for any good investor. The main benefit of the Demat account is that all your information are stored in an electronic form. Maintaining a record of all the purchased and sold securities can be stressful. The account allows you to trade smoothly in the stock market. The account can hold the certificates of different types including mutual funds, governmental securities, shares, and bonds.
The demat account is largely preferred for saving lots of paperwork. It is an excellent way to digitalize the physical shares and keep a track of the investments in securities.