Net Worth Certificate for DEMAT

Let’s Check Which Kind of DEMAT Facilities required CA Wealth Certificate and What is purpose behind it.

1. Margin Trading Facility: Generally this types of trading required Wealth Certificate as Broker allow Trader to buy Stock with only margin amount. Net Worth Certificate assures broker that trader will make inflow of cash in adverse situation.
2. Investment Limits Criteria: As per type of Investment sometime Issuer or Broker required Assets Valuation Certificate to ascertain the class of Investor. (Eg. P2P Finance Investment etc)
3. Regulatory Requirement: As per SEBI Guidelines on Customer/Account Holder KYC Norms (Know Your Customer), Net Worth Certificate is Essential part of KYC for Person, Partnership Firm, Company or LLP etc. This Assures Financial Strength of Investor to engage in Investment and Trading.
4. Risk Assessment : Portfolio Manager and Broker Will Ask for CA Net Worth Certificate to check risk taking capacity of Client. According to that Broker can set limit of Trades, F&O Activation etc.
5. Fraud Prevention and Due Diligence: To Prevent from unauthorized trading, or to stop from trades where possibility of non fulfillment may arise from client side. Thus, Overall prevention from fraudulent transactions.
6. Derivatives: Future and Options (F&O) Activation requires Net Worth Certificate of Trader.
7. Accounting Opening of Separate Entity: Separate Legal Entities Like Partnership Firm, LLP, Private Limited Company DEMAT Account Requires Net Worth Certificate of Firm or Company.