The Securities and Change Board of India (Sebi) on Tuesday granted permission to Associations of Individuals (AoP) to open demat accounts in their very own identify.
By demat accounts, AoPs can maintain mutual fund items, company bonds, and authorities securities.
Nevertheless, such demat accounts can’t be used for holding fairness shares.
The brand new rule goals to make it simpler for Associations of Individuals to take a position whereas guaranteeing regulatory compliance.
“Upon examination of the related authorized provisions and after detailed deliberations with stakeholders, to foster and guarantee ease of doing enterprise, it has been determined to permit opening of demat account within the identify of the AoP for holding securities, equivalent to items of mutual funds, company bonds and authorities Securities in demat account,” Sebi mentioned in a round.
“Demat account just isn’t for use for subscribing/holding fairness shares,” the market regulator additional mentioned.
This growth comes after the market regulator had obtained representations to allow the opening of demat accounts straight within the identify of AoPs.
The brand new rule will come into impact from June 2, 2025.
Regulatory compliance
The AoPs are required to comply with the foundations governing its structure.
Sebi additionally mentioned that PAN particulars of the AoP and its Principal Officer (equivalent to a secretary or treasurer) have to be offered.
As per the Sebi guidelines, the principal officer would be the authorized consultant in case of disputes. All members of the AoP are collectively answerable for the account.
In a separate round, Sebi has requested Business Requirements Discussion board (ISF) member associations and inventory exchanges to publish trade requirements relating to LODR (Itemizing Obligations and Disclosure Necessities) Rules on their web sites.
The ISF, together with Assocham, CII, and Ficci, has created trade requirements in session with Sebi. These requirements intention to simplify and enhance how corporations disclose materials occasions.
Listed corporations are required to comply with these requirements to adjust to the foundations.
