Can a Minor Apply for an IPO? Before we answer this question, let us understand the definition of a minor!
A minor is someone who is below the age of 18 years. This magic number ’18’ varies from one country to another, however, most of the countries including India treats ’18’ as the separation line. This age separates someone in an adulthood from childhood. Most of the financial and legal entities differentiate a minor from an adult based on age. The respective laws and governance are different for both kinds of users.
As we know, that a Demat Account is mandatory to store shares you buy from the stock market. In case of IPO, if you get shares allocated, all those are credited to your demat account itself. Thus, the minor needs to make sure to open a demat account in advance before applying an IPO.
In order to open the account, the guardian must have a valid PAN card as a mandatory document among other documents required to open a demat account. In certain cases, where the minor is earning a legitimate income, he/she can be issued a PAN card as well and then, the dependency of Demat account is also taken care of.
Well, as far as the answer to the question of whether a minor can apply for an IPO – is Yes, a minor can apply for an IPO.
A minor can apply for the IPO under the supervision of a parent or guardian. In case, the minor does not have parents, then the guardian can be appointed by the court.
As far as using a bank account is concerned, a minor can use any of his/her parents’ bank account to link with the trading account (in the name of the guardian). It also needs to be known that not many stockbrokers allow minors to open a trading account, just the demat account.
Once the minor ages beyond 18 years, then the minor can decide one out of the two:
Convert the minor demat account into major demat account while deleting the details of the guardian.
Close the minor demat account and open a new one.
Hopefully, your confusions related to the age factor when it comes to the stock market investments were cleared. Feel free to add your queries and thoughts in the comments section below.
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