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Death of Demat Account Holder - What to do?
Equities to outperform other Investments
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Death of Demat Account Holder - What to do?

Posted: 11 Sep 2015 07:07 AM PDT

Demat accounts can be held by a single individual or jointly. In case of death of the single account holder or one of the joint holders, rules of transmission will apply with respect to the securities held in the demat account. The surviving joint holders, nominee or legal heirs of the deceased account holder need to approach the Depository Participant (DP) with the requisite papers for transmission process of the securities. However, if shares were held in physical form, one would have to approach each company.

Nomination exists

If a single demat account holder dies leaving a nominee, the transmission procedure is simple. The nominee is required to submit a duly filled in transmission form and a notarised copy of death certificate duly attested by a Gazetted Officer or a Notary Public. The form can be obtained from the DP office or can be downloaded from the DP website. The DP verifies the submitted documents and if found in order, transmits the securities to the DP account of the nominee.

No nomination

In case of death of a singly-held demat account holder with no nominee registered, securities will be transmitted to legal heirs of the deceased as determined by the order of a competent court. If value of securities are less than `1 lakh, the transmission request may be processed on submission of transmission form, attested death certificate copy, a letter of indemnity, an affidavit in the prescribed format and NOC from all legal heirs who do not object to transmission.

Jointly held accounts

For jointly held accounts, the securities are transmitted to surviving holders on submission of the duly filled transmission form, and duly attested copy of the death certificate of the deceased holder. For transmission of securities, the surviving holders need to have or open a separate DP account with names in the same sequence in which the names appear in the joint account to be closed.

Registering a nomination for a demat account helps eliminate the need for documents such as will, succession certificate for transmission of securities.

The nomineelegal heirs are required to have a DP account if not already there.

As an alternative to NOC, attested copy of a family settlement deed can be provided.

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Equities to outperform other Investments

Posted: 11 Sep 2015 06:46 AM PDT

Equities to outperform other asset classes

As returns from realty and gold fall, investors are likely to benefit the most from equities.

India's structural shift from a high-inflation economy to a low-inflation economy is ex pected to have a profound impact on asset classes: those that did well in the last several years like real estate will not remain as attractive, whereas financial asset classes like equities will become the best bets.

In the last 6-7 years, the share of financial savings declined from 52% of household savings to 40%, while physical savings like gold and real estate went up. The good news is that recent policy moves in India indicate that policy-makers are cognisant and committed to bringing inflation down structurally to below 5%, which can start the process of revival in productive financial savings. As infla tion was high in the last few years, input costs like material, fuel and labour went up, which companies were unable to pass on due to weak demand. So, sales growth slowed down, margins declined by close to 400 basis points (bps), while fixed costs and interest remained high. But now that growth is reviving, sales growth across several cyclical sectors is expected to accelerate. With costs moderating, global commodity prices falling, under-utilised capacities getting utilised and pricing power increasing, profit margins are also expected to expand. Consequently, as earnings growth accelerates to 18-20% levels, equities are likely to provide superior returns in the coming years.

Going forward, with a 500 bps decline in inflation, there is likely to be a similar decline in expected returns from real estate. Moreover, home loan rates have barely declined by 50 bps so far, reducing the gap between real estate returns and interest rates. In fact, in the last one year, the All-India Residential Property Price Index has increased only 3.6%.

Then, post-Lehman, investors rushed to gold as a safe haven, leading to 36% compounded returns by 2011. But, since then, with improving financial stability, gold prices in dollar terms have fallen from $1,900-levels to around $1,100. Also, the rupee has become resilient and made gold unattractive even in rupee terms.

Indian equities are expected to be the best asset class to benefit from the positive developments happening in India. Investors should accordingly re-strategise their investment portfolios to benefit from this meaningful shift in the underlying fundamentals of each of these asset classes.