The Securities Exchange Board of India (SEBI) on February 25, 2025, issued a notification regarding the Opening of Demat Account in the name of Association of Persons.
SEBI has decided to allow Associations of Persons (AoP) to open demat accounts in their own name for holding units of mutual funds, corporate bonds, and Government Securities. This decision was made after reviewing legal provisions and consulting stakeholders to enhance ease of doing business in the securities market.
To ensure compliance, AoPs must adhere to specific conditions. They must only subscribe to securities permitted under their governing statutes. Additionally, the Permanent Account Number (PAN) of both the AoP and its Principal Officer must be submitted. Depository Participants must verify that the AoP holds only allowed securities and does not subscribe to equity shares. In case of disputes, the Principal Officer will be considered the legal representative, and all AoP members will be jointly and severally liable for the account.
Depositories are directed to make necessary amendments to their rules, notify stakeholders, and implement the changes. The provisions of this circular will come into effect from June 2, 2025, under SEBI’s regulatory powers to protect investors and regulate the securities market.
[Notification No. SEBI/HO/MRD/PoD1/CIR/P/2025/24]
