On May 27, 2025, IND CDSL said depository participants (DPs) may open demat accounts directly in name of AOP, subject to specific conditions; AOPs must ensure they only subscribe to securities permitted under statutes governing their constitution.
PAN card details of AOP, principal officer must be obtained and maintained by the DP.
Principal officer will act as AOP’s legal representative in disputes, with all members jointly, severally liable; two new sub-status codes are introduced in CDSL systems.
DPs must update back office systems to capture and store PAN details of the AOP and its principal officer, and subsequently input these into the CDAS system once available.
Must obtain confirmation from the AOP that it holds only permissible securities as per governing statutes; will not use demat account to subscribe to or hold equity shares.
A declaration must be obtained from the AOP at the time of account opening.
On Oct. 16, IND SEBI proposed rules re opening of demat account.
IND SEBI issued consultation paper on opening of demat account in the name of association of persons (AOPs) for holding certain securities in dematerialized form.
Proposal
Amends master circular to allow AOPs to hold certain financial assets (i.e. mutual fund units, corporate bonds, government securities) in demat accounts in own name.
Ensures AOPs only hold securities permitted by the statutes governing them.
Allows AOPs to open demat accounts for holding non-equity securities; PAN details of AOP must be provided, and demat account must not be used for holding equity shares.
Effectiveness
The consultation is open until Nov. 5, 2024.
Feb. 2025 IND SEBI Circular Issued
On Feb. 25, 2025, IND SEBI issued circular on demat accounts in the name of AOPs.
Inserts new provisions in the Dec. 2024 master circular for depositories (see #235703) to implement the proposals above; the circular is effective from Jun. 2, 2025.
Depositories are advised to take necessary measures re the above, amend relevant bylaws, notify their market participants of this circular, disseminate it on their website.
May 2025 IND CDSL Operating Guidelines
On May 27, 2025, IND CDSL said depository participants (DPs) may open demat accounts directly in name of AOP, subject to specific conditions; AOPs must ensure they only subscribe to securities permitted under statutes governing their constitution.
PAN card details of AOP, principal officer must be obtained and maintained by the DP.
Principal officer will act as AOP’s legal representative in disputes, with all members jointly, severally liable; two new sub-status codes are introduced in CDSL systems.
DPs must update back office systems to capture and store PAN details of the AOP and its principal officer, and subsequently input these into the CDAS system once available.
Must obtain confirmation from the AOP that it holds only permissible securities as per governing statutes; will not use demat account to subscribe to or hold equity shares.
A declaration must be obtained from the AOP at the time of account opening.
Regulators
IND CDSL; IND SEBI
Entity Types
B/D; Depo
Reference
Com CDSL/OPS/DP/POLCY/2025/355, 5/27/2025; Cir SEBI/HO/MRD/PoD1/CIR/P/2025/24, 2/25/2025; CP 10/16/2024
