The Securities and Exchange Board of India (SEBI) has introduced new rules regarding nominations for mutual funds and demat accounts.
Starting from March 1, 2025, an investor can nominate up to 10 people in their demat account or mutual fund folio. This change is part of SEBI’s efforts to improve asset management and reduce unclaimed assets.
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Purpose of the Change
The main goal behind this rule is to manage investments better and reduce the number of unclaimed assets.
When an investor passes away or becomes seriously ill, there can be confusion or disputes among family members about who should claim the assets. SEBI’s new rule aims to prevent such issues.
Nominee Information Requirements
To nominate someone, investors must provide detailed personal information about the nominee, such as their phone number, email address, Aadhaar number, PAN number, and driving license number.
Additionally, the investor must specify their relationship with the nominee. It’s important to note that the investor’s Power of Attorney (POA) cannot nominate someone on their behalf.
New Rules for Nominees
The person nominated in the mutual fund or demat account can either be a joint holder with other nominees or create a separate folio or single account for their share.
1) To transfer assets to the nominee, the following documents will be needed:
2) A self-attested copy of the deceased investor’s death certificate
3) The nominee’s KYC should be complete
4) A due discharge from creditors
Submission and Record Keeping
SEBI has directed mutual fund houses and depositories to allow investors to submit their nomination forms both online and offline.
Investors will receive an acknowledgement for every nominee submission to ensure transparency. These entities must keep a record of the nominee and acknowledgement for eight years after the transfer of the account or folio.
Rules for Physically Disabled Investors
For investors who are physically disabled, the mutual fund or broker must allow one of their nominated persons to manage the account.
Investors will also have the option to assign a specific percentage or total value of their assets to a nominee.
However, permission from the physically disabled investor must be obtained personally by the asset management company (AMC).
Furthermore, any funds withdrawn must go into the investor’s registered bank account, and no changes can be made to the contact details or linked accounts.