For jointly-held mutual fund accounts, capital markets regulator SEBI has made nomination optional to facilitate business.
In a circular dated 30th April 2024, the Securities and Exchange Board of India (SEBI) said, “…it has been decided that the requirement of nomination specified under clause 17.16 of the Master Circular for Mutual Funds shall be optional for jointly held Mutual Fund folios.”
Further, SEBI allowed fund managers to employ a single fund manager to manage commodities and foreign investments. This will help to reduce the cost of managing funds.
However, this law is only optional for mutual fund portfolios that are jointly held. Individual mutual fund holders must submit nominations.
Deadline for All Individual Mutual Fund Holders
As per the regulation, individual mutual fund holders must nominate or opt out of nomination before June 30, 2024. Failure to comply with this regulation will result in their account being frozen for withdrawals.
Factors to Consider While Nominating
Nominations can provide additional protection and accelerate the transfer of assets to beneficiaries in the case of the investor’s death, they are no longer required, allowing individuals to adapt their investment plans to their particular requirements.
Before deciding whether to nominate someone for mutual fund ownership, investors should evaluate their –
- Personal Circumstances
- Financial Goals
- Personal Connections
Also Read: How is income from Mutual Funds taxed in 2024?
SEBI’s decision to make nominations optional for joint mutual fund portfolios is a significant step towards increasing investor liberty and freedom.
It aims to increase investor confidence and trust in the mutual fund ecosystem by giving investors more control over their investment decisions, while also ensuring regulatory compliance and investor protection.
Investors are advised to remain up to date on regulatory developments and engage with financial advisors in order to make educated investment decisions that are in line with their financial goals and preferences.
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before making any investment decision.
