Can I apply an IPO application in the name of Minor or HUF?

Last Updated: 26-Dec-2023

Short Answer

Yes, you can apply for an IPO application under a minor or HUF's name, provided they have different PAN card numbers. Minors can open a Demat account with their parent’s PAN Card and bank account.

Detailed Answer

As per the SEBI guidelines, a person willing to apply for an IPO can only apply once for a particular IPO. Any more than one application per IPO will lead to the rejection of all the extra applications applied. Its determined by the PAN number as to how many applications the traders or investor might have applied. However, when it comes to a minor or HUF willing to apply for an IPO, things change slightly.

An IPO application under the name of a minor or HUF can be applied provided they have their PAN card details, minor demat account, and savings bank account details. For bank account details, traders or investors can give their account details as banks allow up to 5 IPO applications to use the same bank account details. But do keep in mind, you cannot use your PAN card details. Only the minor’s or HUF’s PAN card details would be viable in this situation.

What are IPOs?

When a company sells its shares to the common public for the first time, the process is known as an ‘Initial Public Offering’ or IPO. After an IPO, a private company is converted to a public limited company as the shares are sold to retail and institutional investors.

When applying for an IPO, you are among the first investors to purchase the shares of a private company from the primary market. And once the listing takes place, you can buy/sell the shares on the stock exchanges with the help of a stock broker and Demat account. IPOs have been in the limelight for the past couple of years, as a plethora of companies went public from 2020 to 2021. Additionally, there are many IPOs lined up in 2022. Hence let’s look at some of the requirements for applying for an IPO.

Requirements for applying in an IPO

When you are applying for an IPO, you are bidding for the shares of a company. Therefore, the primary requirement for applying for an IPO is a Demat and trading account.

1. Demat & Trading Account

A Demat account is an account that maintains your shares safely and allows you to buy and sell them freely. Without an active Demat account, you cannot purchase or sell shares of any company.

2. Bank Account

Next, you need to have a bank account to make the payment for the shares. A bank account is mandatory because the whole IPO process is online. Therefore, you will need to make the payment for the IPO application through UPI or ASBA (Application Supported by Blocked Amount). While applying for an IPO, the funds are blocked in your bank account for a certain time frame. And only after successful allotment the amount is deducted from your account.

3. Pan Card

You will also require a valid PAN number through which your application will be mapped to the registrar of the IPO. PAN number is compulsory when applying for an IPO. Also, only one IPO application can be placed from a pan number. Or all the applications will get rejected if you apply for multiple lots from numerous Demat accounts.

Can I apply for an IPO in the name of a minor?

A common question among investors is, “Can I apply for an IPO from a minor’s account.”

Minors can open a Demat account with their parent’s PAN Card and bank account. Thereby, if a minor has a Demat account, you can apply for an IPO through that account. However, you should remember, you can use only 1 PAN number for one IPO application. Hence, if you have placed an application from a minor’s demat account, you cannot place another application using the same PAN Card.

Can I apply for an IPO from a HUF account?

Another common question when investing in an IPO is, “Can I apply for an IPO from a HUF account”

HUF or ‘Hindu Undivided Family’ account is treated as a separate account. Therefore, if you have a Demat account in the name of a HUF, you are eligible to apply for an IPO through it. HUF accounts are a great way to apply for IPOs as you can increase your chances of receiving an allotment when applying through multiple accounts.

Not every bank will allow you to file an IPO application in the name of a minor or HUF. Right from 1st May 2022, a lot of restrictions have been imposed in this regard. Here is a crisp of it.

  • All banks that offered 3rd Party ASBA IPO applications have stopped. Now every application will be made via PAN. It means the PAN of the primary holder of the bank account as well as demat account will be matched.
  • HDFC net banking is one of the banks that is allowed to file in the name of minor or HUF.

If you still want to apply then a written IPO application has to be filed to seek permission.

Tagged With: ipo applicationapply ipo
Categories: IPO Basics
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Can I have Demat & Trading Account in the name of HUF?

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Can I apply in an IPO through multiple applications on same name?

No, a person cannot apply for a single IPO more than ones. There are strict rules and regulations followed in this matter. However, his/her family members can apply for the IPO under their name provided they have a demat account and PAN number.

How many IPO applications can I submit through online net banking from one bank account?

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Can I apply for more than 1 Lot in IPO from different Demat accounts?

Yes!, one can apply 1 Lot from different Demat accounts but they have to make sure that the other Demat account should not be mapped under their name or PAN Card. If one applies through 2 or more Demat accounts that are mapped under their name then all of the applications will get rejected.