New nomination rules for demat accounts and mutual fund folios will come into effect from September 1, 2026.
The changes are important for investors who hold shares or invest in mutual funds.
Under the new rules, investors with a single demat account or mutual fund folio will need to either add a nominee or formally opt out of nomination.
Those who do not want to add a nominee can submit an opt-out declaration.
Why Is SEBI Changing the Nomination Rules?
Market regulator SEBI has introduced these changes to make the nomination process simpler for investors. The rules are also aimed at making it easier to transfer shares and mutual fund units after an investor’s death.
This could help reduce paperwork, delays and legal disputes involving family members or legal heirs.
Investors who do not want to appoint a nominee will be able to opt out through their broker, bank or mutual fund’s website or app. They can also submit the required declaration through the available offline process.
For joint demat accounts and mutual fund folios, nomination will continue to remain optional. However, the consent of all joint holders will be required to add or change a nominee.
What Will Change From September 1?
Investors will continue to be allowed to appoint a maximum of three nominees. SEBI had earlier proposed increasing this limit from three to 10, but that proposal has been withdrawn.
If an investor appoints multiple nominees without specifying their individual shares, the assets will be divided equally among them.
Another major change is the removal of video verification. Earlier, investors opting out of nomination could be required to record and upload a video as proof.
Under the new system, investors can opt out by submitting a simple declaration online or offline. No video verification will be required.
Fewer Nominee Details Will Be Required
The nomination process will also become simpler in terms of documentation. Earlier proposals included several details such as the nominee’s address, email, mobile number and identification information.
Now, only the nominee’s name and relationship with the investor will be required. Other details will remain optional.
Can a Nominee Operate the Investor’s Account?
An earlier proposal suggested that a nominee could be allowed to operate an investor’s account if the investor became seriously ill or incapacitated.
However, this proposal is not being implemented for now. A nominee will not automatically get the right to operate the investor’s demat account or mutual fund folio under this change.
What Happens If You Have No Nominee?
Investors who have not yet added a nominee to their demat account or mutual fund folio will receive regular reminders.
Depositories and mutual fund Registrars and Transfer Agents (RTAs) will remind such investors every six months to complete the nomination process or formally opt out.
The new rules are expected to make nomination easier while ensuring investors clearly record whether they want to appoint a nominee for their investments.