Demat accounts, MF portfolios won't be frozen in absence of nomination

Sebi had set June 30 as the deadline but drops the requirement for existing investors to ensure compliance

The Securities and Exchange Board of India (Sebi) has said that demat accounts and mutual fund portfolios will not be frozen for non-submission of nomination details, seeking to help investors and ease compliance.

The market regulator had set June 30 as the deadline for individual mutual fund holders to submit their nomination choice or opt out of the nomination process. Non-compliance would have resulted in the freezing of accounts, thereby preventing withdrawals. A circular on Monday nullified this requirement for existing investors.

Sebi said investors holding securities in physical form will be eligible to receive payments, such as dividends, interest, or redemption payments, and can lodge grievances or request services from Registrars to an Issue and Share Transfer Agents (RTAs) without having submitted a 'choice of nomination'.

New investors still required to nominate

However, selecting a nominee is mandatory for new investors, with the exception of jointly held demat accounts and mutual fund portfolios. Sebi has asked Asset Management Companies (AMCs) and the mutual fund registrar and transfer agents (RTAs) to encourage demat account holders and mutual fund unit holders, respectively, to update their choice of nomination. This must be done by sending fortnightly emails and SMS messages to all investors who have not yet provided their nomination choice, starting by October 1, 2024.

Sebi has also provided a format for providing nomination and opting out of nomination, both in the case of demat accounts and mutual fund folios. The formats for providing or opting out of nomination are detailed in Annexure-A and Annexure-B of the circular.

Why is it important to designate a nominee?

Regardless of Sebi's updates on deadlines or account status, designating a nominee remains crucial. Adding a nominee ensures that your investments are smoothly transferred to your loved ones in your absence. Without a nominee, beneficiaries may face legal hurdles to claim the money, and in some cases, the funds might remain unclaimed. Take a moment today to update your nominee details and secure your investments for the future.