Is It Possible to Apply for an IPO Through Multiple Demat Accounts and PAN Numbers?
Investors often question the process of applying for Initial Public Offer (IPO) through different platforms and accounts, particularly when it comes to using multiple Demat accounts or PAN (Permanent Account Number) numbers. This article aims to clarify the rules and legal implications of applying for an IPO through multiple Demat accounts and PAN numbers.
Legal Considerations and IPO Application Rules
The first question that arises is whether it is permissible to apply for an IPO using different Demat accounts and PAN numbers even if they are linked to the same bank account. According to regulatory guidelines, it is permissible to apply for an IPO through ASBA (Application Specific Bank Account) option under the net banking facility with different beneficiaries. This means that if you have multiple Demat accounts and PAN numbers but are linked to the same bank account, it is possible to apply for an IPO multiple times under different Demat accounts.
However, this applies only if the applications are submitted with different beneficiaries. If two applications are submitted through different Demat accounts, both will be rejected. Additionally, holding multiple PAN cards for a single individual is considered illegal and is punishable under the Income Tax Act, 1961. This means that if an individual has two PAN cards, they are not allowed to apply for an IPO through two different Demat accounts. Instead, they should consolidate their Demat accounts under a single PAN card, or use the Demat accounts linked to a single PAN card for IPO applications.
Joint Applications and Legality of Multiple PANs
Another point to consider is the legality of having multiple PANs for a single individual. According to the Indian Income Tax Act, an individual can have only one PAN and only one Demat account. Holding two or more PAN cards for a single individual is illegal, and the individual may face legal consequences for non-compliance. However, there are certain exceptions.
For instance, if there are joint holders for a single Demat account and each of them has a different PAN, it is possible to apply for an IPO from the joint Demat account, provided that both are either sole holders or joint holders of the corresponding bank accounts. This exception allows for joint applications, but it must be ensured that the legal ownership of the Demat and bank accounts is properly established.
Family Members and IPO Applications
In some scenarios, an individual may want to make joint applications for an IPO under different family members' names. While it is possible to apply for an IPO through multiple applications with different family members' names, all eligible family members must have a Demat account and a PAN number. If any family member lacks either a Demat account or a PAN number, the application would be invalid. It is important to note that any duplicate applications made by the same individual under different names will be rejected.
It is also possible to apply for an IPO if the different PAN numbers are held by different entities, as long as both the Demat and bank accounts are owned by either a sole holder or a joint holder. For example, if two individuals who are the joint holders of a Demat account and bank account have different PAN numbers, they can submit an IPO application from these accounts.
Conclusion and Advice
The right to apply for an IPO through multiple Demat accounts and PAN numbers is restricted by legal and regulatory frameworks. While multiple applications are allowed under specific circumstances, such as using different beneficiaries under the ASBA option, it is crucial to adhere to the legal guidelines. An individual can only hold one PAN and one Demat account, and any deviation from this rule can result in legal penalties.
For investors looking to apply for an IPO, it is recommended to consolidate their resources under a single PAN and Demat account. This not only simplifies the application process but also ensures compliance with legal requirements. Additionally, joint applications are feasible if all joint holders have the necessary financial and legal documentation established.