Sebi Proposes Demat Accounts for Associations of Persons

In a move to facilitate the ease of doing business, Sebi has proposed allowing Associations of Persons (AOPs) to open demat accounts under their names for holding certain securities, except equity shares. This proposal aims to shift from physical to electronic holding. Public comments are invited by November 5.

In a significant regulatory move, the Securities and Exchange Board of India (Sebi) has proposed permitting Associations of Persons (AOPs) to open demat accounts in their own names. This development aims to enhance the ease of conducting business and promote the transition from physical to electronic holdings of securities.

The proposal, outlined in Sebi's consultation paper, suggests amending current rules to allow AOPs the capability to directly hold securities, excluding equity shares, through their own demat accounts. For compliance, these entities must provide a valid PAN and ensure the accounts are only used for holding permitted securities.

Sebi has invited public comments on this proposal by November 5, reflecting its response to calls for allowing such entities, including partnership firms and unregistered trusts, to have more direct access to demat accounts. Currently, these entities face legal challenges in holding certain financial assets, which this proposal seeks to address.

(With inputs from agencies.)