Sebi modifies guidelines on nomination facilities in securities market

Markets regulator Sebi on Friday modified its guidelines and issued necessary clarifications on nomination facilities in the securities market in a bid to make the process of transmission and nomination easier for demat accounts and mutual fund (MF) folios.

In its circular, Sebi said that if one or more joint account holders pass away, the assets will be transferred to the surviving holder(s) without the need for additional KYC unless it was requested earlier and not provided.

The surviving holder(s) can update their contact details and add or change their nominee(s) at any time.

Further, investors will have the option to designate a nominee (excluding minors) to manage their account in case they become physically incapacitated. This nominee can be changed as needed.

On nomination opt-out, Sebi said that investors with single holdings can choose to opt out of nomination either online or offline.

The nomination form has been updated with changes like specifying that any odd lot after a division will go to the first nominee and that passport numbers are acceptable for NRIs.

Sebi said that nominees can claim assets in case of the investor's death and may choose to either continue jointly with other nominees or open separate accounts.

The circular will be implemented in three phases, starting on March 1.

Some guidelines will be enforced from June 1 and September 1. Earlier, Sebi allowed investors can nominate up to 10 persons in their demat accounts and mutual fund folios with effect from March 1.

The investor can specify the exact percentage of the investment each nominee should receive, thus having the flexibility to distribute his investments among several beneficiaries according to his wishes, preventing disputes and ensuring a seamless transfer of investments to the rightful heirs upon his passing.

In a separate circular, Sebi has directed issuer companies and merchant bankers to follow the industry standards when disclosing KPIs in the offer documents.

This circular applies to all draft and final offer documents submitted to Sebi or stock exchanges from April 1, 2025.

To standardize the identification and disclosure of Key Performance Indicators (KPIs), the Industry Standards Forum (ISF), consisting of ASSOCHAM, CII, and FICCI, in consultation with SEBI, has developed industry standards for disclosing KPIs in draft and final offer documents.

These standards will be published on the websites of the industry associations and stock exchanges.