Revised framework for nomination in Demat and Mutual Fund

Ease of Investments: Revised Framework for Nomination in Demat Accounts and Mutual Fund Folios

To improve investor convenience, streamline onboarding procedures, and reduce the accumulation of unclaimed financial assets, SEBI has revised the nomination framework applicable to demat accounts and mutual fund folios. The revised provisions address operational concerns raised by market participants and introduce a simplified and more flexible nomination process.

Key Changes in the Nomination Framework

1. Nomination Requirement

• For all single-holder demat accounts and mutual fund folios opened on or after the effective date, nomination is mandatory unless the investor formally opts out through the prescribed declaration process.
• For jointly held accounts and folios, nomination remains optional.
• Any addition, modification, or replacement of a nominee in a joint account requires the consent of all joint holders, irrespective of the operating instructions of the account.

2. Number of Nominees Permitted

• Investors may nominate up to three individuals.
• In the event of the investor’s demise, multiple nominees may either continue jointly in the existing account or hold their respective entitlements through separate accounts or folios.

3. Submission of Nomination

Nomination may be submitted through either online or offline channels.

Online Mode
Investors may authenticate nominations using any of the following methods:

• Digital Signature Certificate (DSC);
• Aadhaar-based electronic signature or any other legally recognized e-sign facility; or
• Two-Factor Authentication (2FA), including an OTP sent to the registered mobile number and email address.

Offline Mode

• Nomination forms must bear the physical signature of the account holder.
• Witness signatures are not required where a standard signature is provided.
• If the investor uses a thumb impression, two witnesses must attest the form and provide their identification details.

4. Information Required in Nomination Forms

Mandatory Details

• Name of nominee.
• Relationship between the investor and nominee.
• Date of birth where the nominee is a minor.

Optional Details

• Mobile number and email address.
• Percentage allocation among nominees.
• KYC or identification details.
• Guardian details for minor nominees.

Where allocation percentages are not specified, holdings will be distributed equally among nominees. Any residual or fractional entitlement will be assigned to the first nominee listed.

5. Opting Out of Nomination

Investors who do not wish to appoint a nominee may opt out by:

• Submitting the prescribed opt-out declaration form; or
• Selecting the opt-out option through the online platform after acknowledging the prescribed declaration.

6. Changes and Cancellation of Nomination

• Investors may add, modify, replace, or cancel nominations at any time without restriction on frequency.
• The prescribed nomination and opt-out forms will also be used for subsequent modifications and for existing accounts and folios.
• Every nomination-related request must be acknowledged by the concerned regulated entity.

7. Disclosure in Account Statements

Periodic account and holding statements must indicate either:

• The name(s) of the nominee(s); or
• Whether nomination has been registered, based on the investor’s chosen disclosure preference.

8. Investor Awareness Measures

For accounts and folios without nomination or where nomination has been opted out:

• Depository Participants and Mutual Fund Registrars shall send reminder communications through email and SMS twice every year.
• Digital platforms shall display educational pop-up messages regarding the benefits of nomination upon the investor’s first login of the day.

These communications will not be sent to investors who have already registered a nominee.

9. Applicability

The revised framework applies to both:

• Existing demat accounts and mutual fund folios; and
• New accounts and folios opened after implementation.

10. Effective Date

The revised nomination framework will become operational from 1 September 2026. Market intermediaries are required to update their systems and processes accordingly.

11. Supersession of Earlier Instructions

Upon implementation, this framework will replace all previous SEBI circulars and instructions relating to nomination in demat accounts and mutual fund folios.

Objective of the Revision

The revised framework seeks to make the nomination process simpler, more accessible, and technology-friendly while ensuring smoother transmission of investments to rightful beneficiaries and reducing the incidence of unclaimed securities and mutual fund assets.

Annexure

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