The Securities and Exchange Board of India (SEBI) has announced new rules for adding nominees to mutual funds and demat accounts.
These rules will come into effect on March 1, 2025. Investors will now be able to nominate up to 10 people for their mutual fund folio or demat account.
This step aims to better manage assets and reduce unclaimed investments.
Why SEBI Introduced These Rules
The primary goal of this change is to avoid confusion or disputes among family members when an investor passes away or becomes seriously ill.
By adding clear nominee details, SEBI hopes to simplify the transfer process and minimize unclaimed assets.
How to Add a Nominee
Investors must provide detailed information about their nominees, including:
Phone number
Email address
Aadhaar number
PAN number
Driving license number
Additionally, investors must specify their relationship with the nominee. It’s important to note that a Power of Attorney (POA) cannot nominate someone on behalf of the investor.
New Rules for Nominees
The nominee can either:
1) Hold the assets jointly with other nominees, or
2) Open a separate folio or single account for their share.
To transfer assets to a nominee, the following documents are required:
1) A self-attested copy of the deceased investor’s death certificate
2) Completed KYC of the nominee
3) A due discharge from creditors
Submission Process and Record Keeping
SEBI has instructed mutual fund houses and depositories to accept nomination forms both online and offline.
Investors will receive an acknowledgement receipt for each submission. These records must be kept for eight years after the account or folio is transferred.
Special Rules for Physically Disabled Investors
For physically disabled investors, one of their nominated persons can manage the account. The investor can also assign a specific percentage or value of their assets to a nominee.
However, permission from the physically disabled investor must be personally obtained by the Asset Management Company (AMC).
Withdrawals from such accounts will only be allowed into the investor’s registered bank account. Changes to contact details or linked accounts will not be permitted.
