A nomination is the single cheapest instruction you can attach to a demat account — and it decides whether your securities reach your family in a few weeks or after years of paperwork and a court. SEBI rewrote the nomination framework effective 1 March 2025, raising the limit to 10 nominees and dropping the threatened account freeze. Here is exactly what changed, the nominee-versus-legal-heir trap most investors get wrong, and how to add or change a nominee online.
What changed in the 2026 SEBI nomination rules
SEBI's circular dated 10 January 2025, effective 1 March 2025, replaced the older nomination regime for demat and mutual fund accounts. The key changes:
| Rule | Earlier | Now (2026) |
|---|---|---|
| Maximum nominees | 3 | Up to 10 |
| Allocation between nominees | Limited | Specify an exact percentage per nominee (must total 100%) |
| Identifying a nominee | Basic details | PAN, last 4 digits of Aadhaar, or driving licence number |
| Incapacitation of holder | Not addressed | A nominee can be authorised to operate the account if the holder is incapacitated, under defined safeguards |
| Account freeze for no nomination | Proposed | Rolled back — accounts are not frozen solely for lacking a nomination |
The percentage feature matters: if you nominate three children, you can now direct 50/30/20 rather than leaving the depository to split equally. If you do not specify percentages for multiple nominees, the default is an equal split.
Is nomination mandatory? The freeze myth, cleared up
For new demat and trading accounts, you must either nominate at least one person or sign a formal declaration opting out of nomination. There is no third option — the account cannot be activated until you do one or the other.
For existing accounts, SEBI had earlier proposed freezing accounts that did not submit a nomination or opt-out by a deadline. That penalty was withdrawn. Your existing demat account will not be frozen merely because you never nominated anyone. But "won't be frozen" is not the same as "you're fine" — without a nomination, your family inherits the hard route described below. Adding one takes minutes and is free.
Nominee vs legal heir: the trap that surprises families
This is the part most investors misunderstand. A nominee is not automatically the owner of your securities. The nominee is the person the depository is authorised to hand the securities to — but who ultimately owns them is decided by your Will, or by succession law if there is no Will.
The Supreme Court settled this in a 2024 ruling (the Shakti Yezdani / Jayanand Salgaonkar matter), holding that nomination under the Companies Act does not override succession law for shares. The nominee receives and holds the securities effectively as a trustee for the legal heirs.
What this means in practice:
- Nomination makes transmission — getting the securities out of the deceased's account — fast and document-light.
- A Will (or succession law) decides who finally owns them.
- If your intended heir and your nominee are the same person, both jobs are done. If they differ, the nominee is expected to pass the securities to the rightful heir.
So nomination and a Will are not substitutes — you want both. For the ownership side of estate planning, the distinction between a nominee and a legal heir runs through every Indian financial asset, not just demat.
What happens if you have NO nomination
When the account holder dies without a nominee, the heirs must claim the securities through transmission to legal heirs — a heavier process than nominee transmission. Depending on the value of holdings and the depository's threshold, the family may need a notarised death certificate, an affidavit, a no-objection from other heirs, an indemnity bond, and for higher values a succession certificate, probate of the Will, or letter of administration from a court. That court route can take months and legal fees. A simple nomination on file avoids almost all of it.
How to add or change a nominee (online, free)
- Log in to your broker / DP portal and open the Nomination section (often under Profile or Account).
- Enter each nominee's name, relationship, date of birth, and an identifier (PAN, last 4 of Aadhaar, or driving licence).
- For multiple nominees, set the percentage share for each (must total 100%).
- If a nominee is a minor, add the guardian's details — the guardian operates on the minor's behalf until they turn 18. (The mechanics mirror a minor's own account; see demat account for minors.)
- E-sign with the OTP sent to your registered mobile/email. The update is usually effective immediately.
You can change nominees any number of times at no cost; the latest valid nomination supersedes earlier ones. If you hold more than one demat account, remember the nomination is per account — update each one. (Not sure how many you have? See can you have multiple demat accounts in India, and check holdings via your CAS statement.)
Special cases: NRIs, minors and opt-out
NRI as nominee: a non-resident can be named a nominee; the securities they receive on transmission are subject to FEMA repatriation rules.
Minor as nominee: permitted, with a guardian recorded to act until the minor is 18.
Opting out: you may choose not to nominate by signing the opt-out declaration — valid, but it pushes your family onto the legal-heir transmission route. Choose it deliberately, not by default.
Nomination is a five-minute, zero-rupee task that can save your family months of court paperwork. If your demat account has no nominee — or an outdated one — fix it today, and make sure your Will tells the same story.
Frequently Asked Questions
How many nominees can I add to a demat account in 2026?
Under SEBI's nomination framework effective 1 March 2025, you can name up to 10 nominees for a demat account, raised from the earlier limit of 3. You can specify an exact percentage share for each nominee, and the percentages must add up to 100%. If you do not specify percentages for multiple nominees, the holdings are split equally.
Will my demat account be frozen if I have not added a nominee?
No. SEBI had earlier proposed freezing demat accounts that lacked a nomination or opt-out declaration, but that penalty was withdrawn. Existing accounts are not frozen solely for not having a nominee. However, nomination or a signed opt-out is mandatory for new accounts, and adding a nominee is strongly recommended because it makes transmission to your family far simpler.
Is a demat nominee the legal owner of my shares?
No. A nominee is the person the depository is authorised to transfer the securities to, but not automatically the final owner. The Supreme Court held in a 2024 ruling that nomination does not override succession law for shares. Ownership is decided by your Will, or by succession law if there is no Will. The nominee effectively holds the securities as a trustee for the legal heirs, so you should have both a nomination and a Will.
How do I add a nominee to my demat account online?
Log in to your broker or DP portal, open the Nomination section, enter each nominee's name, relationship, date of birth and an identifier (PAN, last four digits of Aadhaar, or driving licence number), set the percentage share for multiple nominees so they total 100%, add a guardian if a nominee is a minor, and e-sign with the OTP. The change is usually effective immediately and is free. Nomination is per account, so update each demat account you hold.
What happens to demat shares if there is no nominee after death?
The legal heirs must claim the securities through transmission to legal heirs, which is heavier than nominee transmission. Depending on the holding value and the depository threshold, it may require a death certificate, affidavit, no-objection from other heirs, an indemnity bond, and for higher values a succession certificate, probate or letter of administration from a court. A simple nomination on file avoids most of this.
Sources: SEBI circular on nomination in the securities market dated 10 January 2025 (effective 1 March 2025); Supreme Court of India ruling on nomination vs succession (2024); CDSL / NSDL transmission guidelines. Confirm procedure with your depository participant. Current as of 2026.