Demat Account Nomination Rules in 2026

A nominee is a person you designate to receive your shares and securities after your death. When you hold stocks, ETFs or bonds in a Demat account, those assets do not automatically pass to your family. Without a nominee, your legal heirs must go through a lengthy transmission process involving affidavits, indemnity bonds, succession certificates and significant paperwork that can take months or even years. Adding a nominee cuts through all of that. It ensures your investments reach the right person quickly, without legal disputes or unnecessary delays.

Why Most Investors Skip Nomination

Most investors skip nomination during account opening because it feels like a task for later. That later rarely comes.

The Timeline: How Nomination Rules Have Evolved

SEBI's March 2026 Proposals: 4 Changes That Affect Every Investor

SEBI released a consultation paper on March 17, 2026, inviting public comments until April 7, 2026. Here is what is being proposed.

Change 1- Nomination is by default

Earlier, nomination was optional and many investors simply skipped it. Under the new proposal, when you open a new single-holding Demat account, nomination will be pre-selected as the default. If you do not want to add a nominee, you will have to actively opt out and provide digital consent through a pop-up declaration. For existing accounts without a nominee, brokers will be required to send periodic reminders via email and SMS until investors either add a nominee or formally opt out.

Change 2 - Maximum nominees reduced from 10 to 4

The January 2025 circular raised the nominee cap from 3 to 10, which now proposes bringing it back down to 4. SEBI reviewed industry account data and found that very few investors had added even three nominees. Raising the limit to 10 created operational strain on depositories without delivering real investor benefit. Both NSDL and CDSL would have needed to update their back-end systems, nominee management workflows and depository participant interfaces to support up to 10 nominees per account. The effort was considered disproportionate to actual investor usage. Under current NSDL and CDSL rules, nominees are registered at the Demat account level through the depository participant. Each nominee record is stored separately in the depository system with details like name, relationship and percentage share. A cap of 4 keeps this manageable for both depositories while covering the needs of the vast majority of investors. The maximum number of joint account holders remains unchanged at three.

Change 3 - Fewer mandatory details for nominees

Previously, adding a nominee required providing their full address, contact number, email address, ID proof details and the percentage share. SEBI acknowledged that this was causing investors to drop off during the account opening process. Under the new proposal, only two pieces of information are mandatory: the nominee's name and their relationship with the account holder. Everything else, including address, mobile number, email ID and the percentage share, is optional. This one change alone will significantly reduce the friction of adding a nominee, especially on mobile apps and during first-time account opening.

Change 4 - Nominees cannot operate your account during your lifetime

The January 2025 circular allowed a nominee to manage a demat account if the investor became physically incapacitated. However, implementing this was not straightforward. For NSDL and CDSL, it would have required new systems to verify incapacitation, maintain audit trails and train depository participants nationwide. The fraud risk and cost were too high. So SEBI has proposed removing this provision entirely.

The legal position is simple - A nominee's role begins only after the account holder dies. If you want someone to manage your investments during a serious illness, set up a Power of Attorney with your depository participant. It is the right tool for this situation.

Joint accounts work differently - In a joint demat account, when one holder passes away, the assets automatically transfer to the surviving holder. This is called survivorship transmission. Nomination only applies after all joint holders have passed away. Most joint account holders do not know this.

What happens without a nominee - Without a nominee on a sole-holder account, families need a succession certificate, indemnity bond and notarised affidavits to claim the assets. The process takes six months to over a year and can cost ₹20,000 to ₹50,000 in legal fees. With a nominee in place, the same transfer completes in weeks.

Are These Rules Final? (Updated: May 2026)

The April 7 public comment deadline has passed. SEBI is currently reviewing feedback before issuing the final circular. No final notification has been published as of May 2026. The January 2025 rules remain in effect until then. If you have not added a nominee yet, do it now. It takes two minutes and protects your family from months of paperwork later.

Old Rules vs New Proposal

How to Add a Nominee to Your Demat Account on Broker’s Platform

If you already have a Demat account with Upstox and have not added a nominee yet, here is how to do it

1. Open the website/mobile app and go to your Profile.

2. Select Account Settings and then Nominee Details.

3. Enter the nominee's name and relationship. Other details are optional.

4. Specify the percentage share if you are adding more than one nominee.

5. Verify using OTP and confirm. The process takes under two minutes. You can add, change or remove nominees at any time.

Who Can Be a Nominee in a Demat Account?

Your nominee can be any individual, including a spouse, parent, child, sibling or any other person you trust. A minor can also be nominated, provided you also specify a guardian who will manage the assets until the minor turns 18. Non-individuals such as companies, partnership firms, HUF Karta, trusts or societies cannot be nominees.

Frequently Asked Questions

Is nomination mandatory for a demat account?

Under the current rules, you must either add a nominee or explicitly opt out of nomination. Under the proposed March 2026 rules, nomination will be the default when opening a new account and you will need to actively opt out if you do not wish to nominate.

How many nominees can I add to my demat account?

Under the January 2025 rules, you can add up to 10 nominees. Under SEBI's proposed March 2026 changes, this will be reduced to 4, in line with banking norms

Is a nominee the same as a legal heir?

No. A nominee specifically named individual. Legal heirs are determined by your will or by succession laws. In practice, they are often the same person, but legally they are different roles.

Can I change my nominee after adding one?

Yes. You can update, add or change nominees at any time through your broker's app or website. The process is instant online.

What if I name two nominees but do not specify a percentage split?

Under the proposed rules, the assets will be divided equally between both nominees by default.

Can a minor be a nominee in a demat account?

Yes, but you must also provide the guardian's details. The guardian will manage the assets until the minor turns 18.

What documents does my nominee need to claim the assets after my death?

The nominee will typically need to submit a death certificate, a nomination claim form, their own KYC documents and an indemnity bond. The exact documents depend on the depository participant and the value of the assets.