Nomination: SEBI Extends Last Date to 30th June for Submitting Choice for Demat Account-holders, Mutual Fund Unit-holders

Moneylife Digital Team 28 December 2023

Investor Interest

While making the choice of nomination voluntary for trading accounts, market regulator, Securities and Exchange Board of India (SEBI), has decided to extend the submission of choice of nomination for demat accounts and mutual fund folios to 30 June 2024. Earlier, SEBI had extended the deadline to 31 December 2023 for submission of choice of nomination.

In a release, the market regulator says, "Based on representations received from the market participants, for ease of compliance and investor convenience, it has been decided to extend the last date for submission of choice of nomination for demat accounts and mutual fund folios to 30 June 2024."

"Depository participants (DPs), asset management companies (AMCs) and registrar and transfer agents (RTAs) shall encourage the demat account holders and mutual fund unit holders to fulfil the requirement for nomination or opting out of nomination by sending a communication on a fortnightly basis by way of emails and SMS to all such demat account holders or mutual fund unit holders who are not in compliance with the requirement of nomination. The communication shall provide guidance to provide nomination or opting out of nomination," the market regulator says.

Earlier in November, SEBI decided to do away with its earlier order that provided for the freezing of folios of holders of physical securities without permanent account number (PAN), know-your-customer (KYC) details and nomination, with immediate effect. In March, SEBI made it mandatory for all demat account-holders to either furnish nomination declarations or opt out of nominations by 30 September 2023. As Moneylife had pointed out, joint holders of mutual funds (MFs) and those with very old investments struggled to meet SEBI’s requirements.

In a circular, SEBI says the reference to the term 'freezing or frozen' has been deleted. "Based on representations received from the Registrars' Association of India, feedback from investors, and to mitigate unintended challenges on account of freezing of folios and referring frozen folios to the administering authority under the Benami Transactions (Prohibitions) Act (BTPA) and Prevention of Money Laundering Act (PMLA), it has been decided to do away with the above provisions," the market regulator says.

Under the earlier rule, all holders of physical securities in listed companies needed to furnish PAN, nomination, contact details, bank account details and specimen signature for their corresponding folio numbers. The folios where any one of such documents is not available on or after 1 October 2023 were required to be frozen by the registrars to an issue and share transfer agents (RTA), SEBI had said in May.

Further, frozen folios were required to be referred by the RTA or listed company to the administering authority under the BTPA and PMLA if they continue to remain frozen as of 31 December 2023. (Read: SEBI Says No Freezing of Investment Folios without PAN, KYC and Nomination)

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