NEW DELHI: In a move aimed at broadening investment access, markets regulator Sebi has allowed Associations of Persons (AoPs) to open demat accounts in their own name, enabling them to hold mutual fund units, corporate bonds, and government securities. However, these accounts cannot be used to hold or trade equity shares, ensuring regulatory compliance.
The decision, effective June 2, is expected to ease investment hurdles for informal groups, partnerships, and co-owners who function under the AoP structure. Previously, AoPs had to rely on individual members’ demat accounts, creating legal and operational challenges.
By allowing demat accounts in their own name, AoPs can now invest collectively, streamline asset management, and ensure better regulatory oversight. Sebi’s decision follows multiple representations from stakeholders requesting a change in rules to facilitate direct investment access for AoPs.
The move is expected to benefit investment clubs, family offices, joint ventures, cooperative groups, and other unincorporated entities that manage pooled funds.
Benefits of new rule
Simplified Investment Process: AoPs can now hold investments directly under their name, avoiding complexities tied to individual accounts.
Better compliance and transparency: Regulatory clarity ensures that only permitted securities—mutual funds, bonds, and government securities – are held, preventing misuse.
Ease of joint ownership: Groups pooling funds for investment no longer need to register as a company or LLP, reducing administrative burden.
Legal safeguards: The principal officer of the AoP will serve as the legal representative, providing clarity in case of disputes.
The principal officer will be responsible for compliance and legal matters. All members of the AoP share joint responsibility for the account.
Corporate disclosure norms
In a separate circular, Sebi has directed Industry Standards Forum (ISF) member associations and stock exchanges to publish industry standards on Listing Obligations and Disclosure Requirements (LODR) Regulations. Organisations like ASSOCHAM, CII, and FICCI have collaborated with Sebi to set guidelines for improved corporate disclosures.
These standards will ensure greater transparency, uniformity, and accountability in how companies report material events, benefiting investors and market participants. Listed companies are expected to align their disclosures with these new norms to enhance governance and investor confidence.
