The Securities and Exchange Board of India (SEBI) announced on Monday (10 June, 2024) that demat accounts and mutual fund folios will not be frozen for failing to submit nomination details, easing compliance for stock and mutual fund investors.
In a circular, SEBI said that non-submission of the ‘choice of nomination’ will no longer result in the freezing of these accounts. This move aims to simplify compliance and enhance investor convenience.
To further support investors, SEBI has decided that any withheld payments, including dividends, interest, or redemption payments, currently held by listed companies or Registrars and Transfer Agents (RTAs) due to the absence of nomination details, will now be processed.
Security holders with physical holdings will also be eligible to receive payments and lodge grievances or service requests even without submitting nomination details.
New investors and unitholders will still be required to provide the ‘Choice of Nomination’ for demat accounts and MF folios (except for jointly held accounts and mutual fund folios).
The regulator has also instructed depository participants, asset management companies (AMCs), and RTAs to encourage demat account holders and mutual fund unitholders to update their ‘choice of nomination’. To achieve this, they will send fortnightly emails and SMS messages to those who haven’t yet provided nomination details.
These communications will offer guidance on how to submit a ‘choice of nomination’.
To further motivate existing investors, a pop-up reminder will appear on web or mobile platforms when logging into their demat or mutual fund accounts, starting from October 1.
Additionally, the regulator has provided a format for both nominating and opting out of a nomination for Demat accounts and mutual fund folios. Investors are required to fill in only three mandatory fields: the nominee’s name, the nominee’s share, and their relationship with the applicant.
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Non-mandatory details include the nominee’s address, contact details, email ID, and identification details.
Earlier, SEBI had extended the deadline for submitting nomination details for demat accounts and mutual fund folios to June 30, 2024. Accounts without this information would have been frozen for debits after this date, but this requirement has now been lifted.
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before investing.
