New Rules: SEBI has directed regulated entities such as mutual fund companies and depositories to give investors the option to submit nomination forms both online and offline.
There are going to be major changes in the process of adding nominees in mutual fund and demat accounts. Under this, now investors will be able to add 10 nominees to their account and each nomination will have to be verified through mobile OTP. SEBI has issued guidelines regarding this, which will come into effect from March 1, 2025.
SEBI has directed regulated entities such as mutual fund companies and depositories to give investors the option to submit nomination forms both online and offline. Along with this, the investor will get a receipt for every nomination submission, which will maintain transparency in the entire process.
Nomination will be mandatory for single mutual fund and demat account holders, but it has been made optional in joint accounts. Also, investors can change the nominee at any time. Apart from this, regulated entities will have to maintain the record of nominee and receipt for eight years after the transfer of the account or folio.
This way you will be able to verify
As per SEBI’s instructions, while adding a nominee in a mutual fund and demat account, the investor will get three options. As the first option, Aadhaar based e-sign or any other e-sign facility can be used. Apart from this, two factor authentication will have to be given, in which OTP will be sent to the investor’s registered mobile number and email address. The verification process will be completed after entering both the OTPs. As the third option, digital signature certificate can be used.
You can connect like this offline
The investor has to fill and sign the nominee form in front of a representative of the regulated entities. If the investor is incapacitated, the representative has to go to him personally and complete the process. Two witnesses are also required while filling the nomination form. Only the form filled in the correct manner will be valid. Investors can have the option to add, change or delete the nomination at any time.
Full details of all nominees will have to be given
As per the new system, mutual fund and demat account holders will now have to share their nominee’s personal identity information, which mainly includes information like PAN, driving license number or last four digits of Aadhaar. They will have to provide all the communication details of the nominee, which include home address, email and phone number.
Investors will get this option
1. It will be mandatory for every investor to nominate a person as a beneficiary to whom his securities will be transferred after his death.
2. The investor will have the option to nominate a person who would be authorised to transact on his behalf in case of the investor’s incapacity.
3. If there are more than one nominees, the investor can authorise any one of them to transact on his behalf.
4. SEBI has also clarified that the authorised person will not have the right to reject any nomination other than the authorised person.
Security measures were also taken
As per the new rules, whenever an investment is transferred to the nominees, they will act as trustees for the legal heirs of the investor.
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