New nomination rules for demat accounts and mutual fund folios will come into effect from September 1, 2026.
Investors with a single account will need to either add a nominee or officially declare that they do not want one.
SEBI has introduced these changes to make the transfer of shares and mutual fund investments easier after an investor’s death.
The new rules are also aimed at reducing legal disputes between family members and heirs.
Nominee or Opt-Out Declaration Will Be Required
For a single demat account or mutual fund folio, investors will have to provide nominee details. Those who do not want to appoint a nominee can submit an opt-out declaration.
The declaration can be completed through the website or app of the broker, bank, mutual fund or other relevant service provider.
For joint demat accounts and mutual fund folios, nomination will continue to be optional. However, consent from all joint holders will be required to add or change a nominee.
Maximum Three Nominees Allowed
Investors will continue to be allowed to add up to three nominees to an account.
SEBI had earlier proposed increasing this limit from three to 10, but that proposal has now been withdrawn.
If an investor adds multiple nominees but does not specify their individual shares, the assets will be divided equally among them.
No Video Verification Needed
The process of opting out of nomination is also becoming easier. Earlier, investors who did not want to add a nominee could be required to record and upload a video as proof.
This requirement has now been removed. Investors will be able to opt out by submitting a simple declaration online or offline.
Fewer Nominee Details Will Be Required
SEBI has also reduced the amount of information investors need to provide while adding a nominee.
Only the nominee’s name and relationship with the investor will be required. Details such as address, email, mobile number and identification information will be optional.
Nominee Will Not Be Allowed to Operate Account
An earlier proposal suggested allowing a nominee to operate an investor’s account if the investor became seriously ill or unable to manage it.
However, this proposal is not being implemented for now. A nominee will therefore not automatically get the right to operate the investor’s demat or mutual fund account.
What Happens If You Have No Nominee?
Investors who have not added a nominee to their demat account or mutual fund folio will receive regular reminders.
Depositories and mutual fund Registrars and Transfer Agents (RTAs) will send reminders every six months, encouraging such investors to complete the nomination process.
The new rules are designed to make nomination simpler while giving investors the choice to formally opt out if they do not want to appoint a nominee.
