HUF -  DEMAT OR DEPOSITORY Accounts

It is possible for the HUF to open a Demat account also and the formalities are same as that fr opening a normal account except that in case of Demat account, the Bankers insists on a separate agreement for dealing in shares which is standard and printed form. Such Demat account can be operated either by the Karta or a combination of Karta and any other member.

It is very important that the Demat Account which is opened in the name of HUF has either multiple signatories or has signed a declaration for appointment of nominees if the bank accepts nomination. This is in order to protect the interest of HUF in the event of a death of a member of the HUF who may have been the sole signatory in the account. In such a case, the bank may not allow any transaction in the account and the shares etc held in the account may get frozen until a valid succession certificate from the Court of law is produced.

Another issue to be kept in mind while opening a Demat account in the name of HUF is to c1earli distinguish the title of the account so that it doesn’t resemble with that of an individual account in the same Bank. This is in view of the fact that SEBI has issued guidelines that the Demat Account has to be opened in the name of Natural persons and in case of HUF account, bankers generally open the account in the name of Karta and the type of the account is classified as HUF account.