Who can invest

Every folio begins with a simple question the exam loves: who is allowed to invest? Get the categories and their quirks right and a whole cluster of easy marks follows.

Among individuals, resident adults may invest alone or jointly, up to three holders in one folio, where the first holder is the primary one for all payouts, dividends and tax. Minors are a favourite trap: a minor invests only through a guardian (a natural parent or a court-appointed one), the money must come from the minor’s or the guardian’s bank account, and a minor’s folio can never have a joint holder. An HUF invests through its Karta. And NRIs, PIOs and OCIs can invest, with one distinction that matters: on a repatriable basis (funded from NRE/FCNR accounts, so proceeds can go abroad) or a non-repatriable basis (funded from an NRO account).

Beyond individuals sits a long list of institutional investors, companies, registered trusts and societies, partnership firms, banks and financial institutions, other SEBI-registered mutual funds, FPIs, and government-approved bodies, each allowed to invest only if its own constitution permits it. For every non-individual, the fund must look through to the Ultimate Beneficial Owner (UBO): broadly, anyone with more than 25% of a company, or more than 15% of a partnership or trust interest (listed companies are exempt). When in doubt, the definitive list is always the “Who can invest?” section of the scheme’s own SID, some schemes deliberately restrict who may join.