How To Open A Demat Account For A Company?

A Demat account is widely used to store electronic shares and securities. The goal of a Demat account is to keep previously purchased or dematerialized assets, making online share trading easier for users. In this article, you will learn how to open a demat account for a company.

Image Credits – Unsplash

To answer the main question, How to open a demat account for a company, you will have to follow some procedures and prepare some documents. 

How To Open A Demat Account For A Company? 

Here are some documents or procedures that you will need to follow. Do note that this may vary slightly according to different brokers, so crosscheck with your broker to ensure you have all the required documents and follow all the steps properly. 

  • AMC on a corporate Demat account is Rs.1000/- including all Companies.
  • Next, you will have to fill the Trading & Demat / Commodity form with Managing Partner's photograph attached and signed everywhere.
  • The company's pan card copy should be provided
  • Whole-Time Directors or All Authorised Signatories should have a copy of their Pan Card.
  • For the company address proof copy: The company's address proof copy and Authorised Signatories or Whole-time Directors must also provide proof of address.
  • You will have to provide proof of bank account (a sample copy of a canceled check leaf, a bank statement, a bank passbook, or a bank letter).
  • Copy of the Corporate Firm's Balance Sheet for the Previous Two Financial Years* (must be supplied every year) and, if newly established, a net worth certificate from the CA. An ITR declaration is required if the company is new. (On all pages of the balance sheet, the Authorized Signatory's seal and signature should be visible.)
  • According to the Board Resolution, the Authorized Person must have an Aadhaar card. This person could be a Manager/Director or anyone else who the Board of Directors has authorized.
  • You must present your Certificate of Incorporation.
  • A copy of the MoA and the AoA. The seal and signature of the company's Authorized Signatory should appear on the first four pages of the MOA and AOA.
  • If the names of the current Directors do not appear on the MOA/AOA, complete Form 32.
  • Annexures that have been properly filled out. (With the signature of the authorized director and the company's seal affixed to the signature of the authorized director.)
  • Resolution of the Board of Directors.
  • Photographs of individual promoters who have direct or indirect control.
  • For non-individual accounts, physical verification is necessary as part of the statutory IPV requirement for all brokers. Specific to Zerodha, to complete the IPV procedure, a client representative must visit a Zerodha branch office OR a Zerodha representative must visit the client's offices/residence.
  • Declaration under FATCA.
  • Each director must fill out and sign their KYC form (directors must sign without the stamp on individual KYCs and accompanying documents).
  • If an individual owns more than 25% of the applicant's stock, capital, or earnings, the individual must name themselves as an ultimate beneficiary and submit Annexure A.
  • Suppose an entity owns more than 25% of the applicant's shareholding, capital, or profits. In that case, the entity must identify as an ultimate beneficiary and submit Annexure-A along with -(a) self-attested copies of the KYC documents of the Whole Time Director/ Individual Promoters of such an entity owning 25% or more; AND(b) shareholding pattern (on company letterhead) of the entity owning 25% or more.

These are some common steps that you will have to follow while opening a demat account; after fulfilling these requirements, your brokers will guide you through the other processes. 

Conclusion 

A Demat account is one that is totally dematerialized. It's used to keep electronic records of stocks and shares. The idea was first proposed in 1996 as a possible substitute for physical stock certificates. A Demat account streamlines and accelerates share trading while removing all of the risks and hassles that come with physical stock certificates.

Stocks, ETFs, bonds, debt instruments, mutual funds, and financial instruments are all examples of investments that can be held in a Demat account. If you want to invest in the Indian stock market, you'll need a Demat account.

We hope this article about how to open a demat account for a company was helpful for you! 

About Stuart Cook

Digital Marketer, Dreamer, Entrepreneur and an avid Traveler.

Leave a Comment