How do Corporate Demat Accounts Help With the Growth of Start-Ups and SEMs?
The start-ups and small and medium enterprises serve as important contributors to the growth of a country. Known for their contribution to the development of an economy as well as the capital markets, start-ups and SMEs require access to funds from various sources like investors, venture capitalists, and even financial markets. Therefore, to leverage the return-generating capability of the stock market, start-ups and SMEs open a dedicated corporate demat account. Serving as a digital central depository for companies, proprietorships, and even start-ups, a trading app and a dedicated corporate demat account deliver an extensive range of benefits. The following article explores how corporate demat accounts can help with the growth of start-ups and SMEs.
What is a corporate demat account?
A corporate demat account serves as an electronic digital depository that is opened in the name of a corporate organisation like a start-up, proprietorship, partnership, etc. Offering unrestricted access to the stock market, the demat account helps start-ups and small and medium-scale enterprises to hold securities like shares, debentures, mutual funds, and even bonds in an electronic format. Moreover, companies can manage their investments, raise funds, and build financial credibility to get investments from potential investors.
Benefits of a corporate demat account
Investment management
Opened and managed by start-ups and SMEs, A corporate demat account holds all the investments in an electronic format at a single place. These investments can be in any electronic format, like equity shares, mutual funds, and even debentures. These investments serve as the capital for start-ups and small and medium-scale enterprises that can use the demat account for managing, tracking, and utilising their funds. Moreover, the corporate demat account is used to improve the process of managing corporate holdings and carrying out other corporate actions, like the payment of dividends.
Employee stock ownership plan management
Employee stock ownership plan or ESOP is a benefit that employees working within an organisation receive to ensure their retention for a longer period. A corporate demat account allows start-ups, small and medium-scale enterprises, and even companies to manage the process of ESOP allotment. The demat account offers transparency and efficiency to the process of ESOP management and allotment.
Building credibility
Opening a demat account helps start-ups and small and medium-scale enterprises to attract investors and build credibility in their minds. They can easily attract the attention of venture capitalists, institutions, angel investors, and other organisations who wish to invest in the start-up or SME. Moreover, to open corporate demat account, companies have to go through a dedicated step-by-step process of compliance procedures like submission of board resolutions, company registration documents, and memorandum of association, etc. With fulfilment of all requirements, start-ups and SMEs can build credibility, which can help them raise funds easily.
Conclusion
A corporate demat account therefore offers various benefits from raising funds to managing mergers and attracting investors. Serving as an efficient tool for growth, incorporating demat account can help startups and small and medium scale enterprises to manage their investments and ensure success in the competitive business and financial investment market.
