SEBI Empowers Associations of Persons with New Demat Account Rules

SEBI has allowed Associations of Persons (AoP) to open demat accounts in their own name for holding mutual fund units, corporate bonds, and government securities, but not equity shares. This change, effective June 2, aims to simplify investment processes for AoPs while ensuring compliance. Industry standards have also been updated.

The Securities and Exchange Board of India (SEBI) announced a significant policy change on Tuesday, allowing Associations of Persons (AoP) to open dematerialized (demat) accounts under their own names. This move facilitates AoPs in holding mutual fund units, corporate bonds, and government securities, with the caveat that these accounts cannot be used for equity shares.

This regulatory update, effective from June 2, came in response to requests from AoPs for more direct and simplified investment processes. After examining legal provisions and consulting stakeholders, SEBI decided to enhance the ease of doing business for AoPs by permitting the opening of demat accounts for certain securities.

Additionally, SEBI has urged Industry Standards Forum (ISF) member associations to publish updated industry standards concerning Listing Obligations and Disclosure Requirements (LODR) Regulations. The standards, developed in collaboration with organizations such as ASSOCHAM, CII, and FICCI, aim to streamline corporate disclosure practices, ensuring compliance among listed companies.