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02 Jul, 2025
By Online Legal India
Published On 23 Jul 2021
Updated On 04 Jun 2025
Category Limited Liability Partnership
In today’s rapidly evolving financial landscape, Limited Liability Partnerships (LLPs) increasingly recognise the strategic advantages of integrating Demat accounts into their operational frameworks. This integration streamlines the management of securities and aligns with the digital transformation sweeping across India’s financial sector. LLPs adopt Demat accounts to efficiently handle investments in equities, mutual funds, and bonds, which enhances their financial agility and compliance with regulatory standards. In this article, you will learn in detail about how to open a demat account for LLPs, its cost, eligibility and more.
A Demat account, short for Dematerialised account, is an electronic account used to hold and manage securities like shares, bonds, mutual funds, and ETFs in digital form. It eliminates the need for physical certificates, making the process of buying, selling, and transferring securities faster, safer, and more convenient. Essentially, it acts as a secure digital repository where all your investments are stored and tracked electronically.
Yes, LLPs can legally open Demat accounts in India under SEBI (Securities and Exchange Board of India) regulations. NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) allow LLPs to hold and transfer securities electronically through registered Depository Participants (DPs).
Below is the list of the eligibility criteria to open a demat account for LLPs:
Listed below are the documents required for opening a Demat Account for an LLP:
Here are the steps to open a demat account for LLPs:
Step 1: Select a Suitable Depository Participant (DP)
To start the process, you need to choose a Depository Participant (DP) registered with SEBI. This entity helps you open and manage your Demat account. Pick a DP that supports non-individual accounts like yours and offers clear pricing, digital tools, and reliable support. Make sure the DP works under NSDL or CDSL. The right DP ensures a smooth setup and long-term convenience for your investment activities.
Step 2: Prepare Documents for Your Firm
Before you move forward, make sure all your documents stay accurate, updated, and ready for submission. Check that all pages include correct details and valid signatures. Keep them in a clear file to avoid confusion. Your documents must match the information you provide on the application form. Any mismatch causes rejection. Review everything once more to ensure smooth approval from the Depository Participant. With this step, LLPs ensure a successful application process.
Step 3: Collect KYC Documents of All Authorized Partners
You must submit KYC documents for each authorised partner. These include PAN cards, Aadhaar cards, passport-sized photos, and valid address proofs. Each partner also needs to complete In-Person Verification (IPV) through a branch visit or video call. This step confirms your identity and authority. Your application cannot move forward unless every partner completes this step accurately.
Step 4: Draft a Board Resolution or Authority Letter
To give legal permission for account operation, you need to draft a resolution on your firm's letterhead. This document names the partners who will open and manage the Demat account. Make sure every partner signs it and affixes your official stamp. This step provides legal clarity to the Depository Participant (DP) and confirms your internal approval.
Step 5: Fill Out the Demat Account Opening Form
Next, you need to collect the Demat account form from your selected DP. Fill in firm details, partner information, and your preferred investment options. Attach your authority letter, KYC documents, and proof of identity and address. Each page must carry signatures from authorised individuals. Double-check everything before submission to avoid unnecessary rejection or delay.
Step 6: Complete KYC and In-Person Verification (IPV)
Your DP needs to verify the submitted KYC and IPV details. This helps confirm your identity and ensures compliance with SEBI rules. The process can happen online with Aadhaar or at the DP’s office. You must ensure that all information matches the documents you provided. This step builds the trust and security necessary for account approval.
Step 7: Submit the Full Application to the DP
Once your form and documents are ready, you must submit them to the DP through email, courier, or in person. Self-attest each page and include your firm’s seal where needed. Before sending it off, make sure every field is filled and all documents are attached. A complete submission helps you avoid delays and ensures faster processing.
Step 8: Wait for Verification and Final Approval
Your DP now reviews the entire application. They verify documents, confirm your firm’s eligibility, and ensure all compliance steps are complete. If everything checks out, you receive confirmation along with your unique Client ID. If something is missing or incorrect, your DP will reach out to you for clarification. Once approved, your Demat account becomes active, and you are ready to invest.
Before you open a Demat account for your LLP, check the fee structure of the Depository Participant (DP), as charges vary. Below are the main costs you need to consider before opening a demat account:
Some DPs charge a one-time fee at the time of account setup. Others offer free account opening as a promotional offer. Always confirm whether the DP includes hidden charges in the form of bundled services or upgrades.
To keep the account active you need to pay this every year to keep the account active. The charge covers basic services such as account statements and safekeeping of securities. AMCs differ for LLPs and partnership firms as compared to individual accounts. Some DPs offer zero AMC for the first year.
Each time you buy or sell securities, the DP deducts a transaction fee. This cost depends on the number and value of trades. Charges may apply per transaction or debit from your Demat account. These fees add up, so check the rate structure in advance.
Compliance Requirement for Demat Account of LLPs
Below is a list of the compliance requirements to open a Demat account for LLPs:
KYC (Know Your Customer) Compliance:
LLPs must complete KYC procedures for both the entity and its authorised signatories. This includes submitting PAN cards, address proofs, and photographs. All documents must be self-attested and submitted as per the guidelines provided by the Depository Participant (DP).
An authorised signatory must undergo IPV to verify the authenticity of the documents submitted. This can be conducted either physically at the DP's branch or through a video call, depending on the DP's procedures.
A board resolution or an authority letter on the LLP's letterhead is required. This document authorises designated partners to open and operate the Demat account on behalf of the LLP.
If an individual holds 15% or more of the LLP's capital, profits, or voting rights, they must be identified as the UBO. A UBO declaration form, along with self-attested copies of their PAN and address proof, must be submitted.
The LLP must submit its audited balance sheets for the last two financial years. These documents should be attested by a Chartered Accountant and include the CA's name, registration number, and UDIN.
A net-worth certificate from a Chartered Accountant is required, especially if the LLP is newly incorporated. This certificate must include the CA's UDIN and other relevant details.
A cancelled cheque or a bank statement with the LLP's name, account number, and IFSC code is necessary to link the Demat account with the LLP's bank account.
LLPs must comply with all applicable SEBI regulations concerning the operation of Demat accounts. This includes timely reporting of transactions and ensuring that securities are held in the Demat account as per regulatory requirements.
To sum up, a Demat account for LLPs is not just a regulatory formality; it is a gateway to smarter asset management and streamlined financial operations. It brings transparency, ensures compliance with SEBI norms, and positions the firm for future-ready investing in a digitised economy. Every step, from documentation to verification, demands accuracy and timely execution.
While the process may seem technical, professional assistance can simplify it. Among other service providers, Online Legal India offers trusted support to help you open and manage a Demat account for LLPs with complete legal clarity. Their expert-backed guidance ensures compliance, reduces errors, and enables your business to focus on growth with confidence.
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