If you want to start trading in the stock market, then you have to submit some necessary documents to open a demat account. Most of all documents are easily available and thus, the entire process of opening an account has become very simple these days.
Let’s get straight to the main point of this article and see the list of documents required to open a demat account:
PAN card or permanent account number is a mandatory document, without which you cannot open your demat account. A self-attested copy of your PAN card is required as part of the entire document. It is also necessary to ensure that the photo displayed on your PAN card is easily visible.
As far as PAN card is mandatory in opening a demat account, there are some abnormalities included:
- As per section 139A Traders Residents related to Trader’s Income Slab
- Resident of Sikkim state
- Transactions of institutional customers such as FIIs, MFs, VCFs, FVCIs, commercial banks, multilateral and bilateral development financial institutions, state industrial development corporations, etc.
Trading done by officials appointed by the central or state government or by the Indian courts
PAN card can also serve as an ID proof for you.
To fulfil this requirement you have several options. If your correspondence address is different from your permanent address, you will have to provide both proofs (for some share brokers).
You can choose to provide any of the following documents as address proof:
- driving license,
- Ration card ,
- Aadhar Card,
- Voter ID card
- First page of bank passbook or bank account statement (not more than 3 months old),
- Electricity bill (not older than 2 months),
- Landline telephone bill (not older than 2 months),
- Verified rent contract,
- Holiday or License Agreement / Central or State Government, PSU, ID Card (with address details),
- ID cards (with address details) issued by universities (for students) attached to colleges or professional bodies such as ICWAI, ICAI, ICSI or Bar Council
Although you will have to provide a signed copy of one of these documents, the broker’s staff can also ask / see the original document to be checked.
According to the regulatory bodies of the Indian stock market, traders trading in derivatives (futures and options) or commodities will have to give an income certificate or provide a net worth in your name. The main reason for this is that the trader will use margin which is risky.
Now, the documents of income certificate required to open a demat account can be required by any one of the following documents:
- Form 16 Receipt of IT,
- Copy of bank statement for last 6 months,
- Or a certificate issued by a chartered accountant that confirms your net worth shareholding statement
You should be aware that providing any of the above documents is an essential requirement for trading in the derivatives segment.
You are required to submit an original cancelled cheque. It should show the following information:
- Your account number,
- banks’ name ,
- IFSC / MICR Code,
- Account holder name
This cheque helps to verify that the bank account you are linking to the trading account is a valid bank account and you are the same person who opened the demat account with the share broker.
Depending on the type and number of accounts you open, you will need to provide a certain number of recent passport size photographs.
Generally, the requirement may be 1 to 3 photos.
Make sure the photos you provide are as recent as possible. These photos will be put in the account opening form and you will have to sign these photos.
Account opening and annual maintenance fees Different stockbrokers charge different fees for opening their demat accounts and demat annual maintenance charges or AMC.
You can see this detailed article in the ‘Demat Account Fee’ for reference.
Initial deposit cheque
A related signed check is required to be provided along with the rest of the documents. Make sure that the check you provide is in the name of the share broker and not in favour of any person, the executor.
Things to Consider in Demat Account Documentation
Make sure that you follow some important considerations while giving documents for demat account:
- All documents you provide must have the same name as the account holder.
- None of the documents should be fake or edited as it will directly reject the demat account application.
- If you are a minor (ie under 18 years of age or Minor), then one of your parents or guardian can open a demat account for you. Though the account will be in the name of a minor, the guardian will have to sign the account opening form and they will also be required to provide their personal and contact details.
- If you are an NRI and are trying to invest in Indian exchanges, you will need to provide the original copy of the Attorney with a letter of approval from the Reserve Bank of India, which will allow them to invest (PIS permission Letter).
- If you are opening a joint demat account, the signature of all joint holders is required in the account form.
Once you provide all the documents and the stockbroker has accepted all the necessary documents, an acknowledgment slip will be given later which will be correctly signed. On completion of all the account opening formalities you will receive:
- Client ID (ID length depends on the depository that is registered with the stockbroker.
- DIS or delivery instruction slips
- Copy of last acknowledgment of account opening report.
- Corporate demat account
If you want to open a corporate account, some additional documents mentioned below will be required:
- Copy of the company’s balance sheet for the last 2 financial years. It usually accumulates every year.
- Copy of Board approval for investment in securities market,
- Copies of the shareholding pattern which should include a complete list of the shareholder of the company, directly or indirectly certified by the company secretary or the full-time director or managing director of the company. It also needs to be submitted every year.
- Passport size photographs, along with full time Director / POI, POA, PAN and DIN number, as well as two directors engaged in the business operations of the company.
- Passport size photographs with details such as POI, POA, PAN of individual promoters directly or indirectly controlling the company.
- Memorandum and Articles of Association copies and certificate of incorporation Authorised signature with signatory list in the company.
Also, if you want to open an account?
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Founder & CEO| Fox Investor – Financial Blog Portal & A.V.A. Taxway Associates- Corporate & Tax Law Firm
Dr. Viibhor Agarwal has a Ph.D. in IPR, start-ups, and corporate law, as well as an MBA in finance from NMIMS Mumbai, and achieved numerous certifications in corporate law. He is a practicing corporate lawyer and the founder of two business verticals. He has advised over 2000 businesses, 5000 students, and 400 new start-ups all over India and other countries like Dubai, London, the USA, and Qatar. Dr. Viibhor Agarwal assists people with business expansion and branding, regardless of size, as well as business setup, financial literacy, start-up guidance, licensing, tax planning, and other legal compliance issues. Dr. Viibhor Agarwal’s goal is to provide complete financial and business literacy to all businessmen who want to start new businesses and grow existing businesses and to those students who want to open their start-ups. In each video, Dr. Viibhor Agarwal not only explains the method of the solution but also advises subscribers on practical tips learned from and faced by clients handled by Dr. Viibhor Agarwal daily. This blog portal provides you with an easy and clear solution to your business problem, allowing you to take your business to the next level.