Revised Nomination Facilities in Indian Securities Market – Amendments and clarifications to Circular dated January 10, 2025.
- SEBI issued circular no. SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/01650 dated January 10, 2025 revising the norms for nomination for demat accounts and mutual fund (MF) folios in the Indian securities market.
Clarifications: - Pursuant to the representations received from various stakeholders and discussions held thereafter, it is clarified that:
2.1. Clause 2.1.1: In case of joint accounts / holdings, upon demise of one or more joint holder(s), the regulated entity shall transmit the assets held to the surviving joint holder(s) vide name deletion of the deceased holder(s). However, the regulated entity shall provide the option to surviving joint holder(s) to transmit the assets held, into another existing or new account / folio.
2.2. Clause 2.8: An investor having single holding / account / folio can opt-out of nomination, either online or through physical / offline mode. The online mechanism for opting-out of nomination is outlined at clause 3.10 of the circular.
2.3. Clause 3.5: An investor having single holding / account / folio can, at any point of time, empower any one of the nominees (excluding minor nominee) to operate the investor’s account / folio, in the event where the investor is physically incapacitated, but still has the capacity to contract. Further, the investor can change such nominee any number of times, without any restriction.
2.4. Clause 3.8:
(a) Under the extant KYC read with PMLA norms, regulated entities are required to maintain the complete KYC records of account / folio holders at all times. Accordingly, in case of transmission of joint holdings vide name deletion, the regulated entities shall not seek the KYC of the surviving holder(s) as a precondition for transmission. In other words, the regulated entities shall not reject transmission vide name deletion to the surviving joint holder(s) for non-submission of KYC details, unless the regulated entities had previously sought the KYC documents from the holder(s) and the same were not provided by them.
(b) However, the surviving joint holder(s) shall have the option to update the residential address(es), mobile number(s), email address(es), bank account detail(s), annual income and nominee(s), either at the time of transmission or at a later date. The regulated entities shall capture this choice in the transmission form.
(c) In case a joint account / folio becomes single holding, post the demise of holder(s), then either nomination or ‘opt-out’, is mandatory (refer paragraph 2.8 of circular dated January 10, 2025).
2.5. Clause 3.9: Credit transactions (including through corporate actions) shall be permitted in such accounts / folios.
2.6. Clause 3.10:
(a) For an investor who opens a new account / folio through online mode, the opt-out shall be through online mode. For an investor who opens a new account / folio through offline / physical mode, the opt-out shall also be through offline / physical mode. However, an existing account / folio holder shall have the option to opt-out either through online or offline / physical mode.
(b) In case of demat accounts, the online mechanism for existing and new investors, who want to opt-out of nomination, shall be provided by the Depository Participants (DP) and not the Depositories.
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