Non-submission of Choice of Nomination Will Not Result in Freezing of Demat Accounts, Mutual Fund Folios: SEBI
Moneylife Digital Team 10 June 2024
With the last date to submit a choice of nomination for demat accounts and mutual fund (MF) folios coming near, market regulator Securities and Exchange Board of India (SEBI) has clarified that non-submission of choice of nomination will not result in freezing of these accounts or MF folios.
 
In a circular, SEBI says, "Based on representations received from the market participants, for ease of compliance and investor convenience, it has been decided that payments including dividend, interest or redemption payment withheld presently by listed companies and registrar and transfer agents (RTAs), only for want of choice of nomination will be processed accordingly."
 
"Security holders holding securities in physical form will be eligible for receipt of any payment including dividend, interest or redemption payment as well as to lodge a grievance or avail any service request from the RTA even if 'choice of nomination is not submitted by these security holders," it added.
 
However, SEBI clarifies that all new investors and unit-holders will continue to be required to mandatorily provide the choice of nomination for demat accounts and MF folios, except for demat accounts and mutual fund folios held jointly.
 
All existing investors and unitholders are encouraged, in their own interest, to provide a choice of nomination for ensuring smooth transmission of securities they hold as well as to prevent accumulation of unclaimed assets in the securities market, SEBI says.
 
On 2 February 2024, SEBI released a 16-page consultation paper  proposing revisions to nomination facilities in the Indian securities market, aimed at reducing unclaimed assets and streamlining the process for survivors, beneficiaries and successors of deceased investors.
 
In October 2021, SEBI gave investors the choice of providing nomination or opting out of nomination for opening a new trading and demat account. This was extended to investors subscribing to MF units from 1 August 2022.
 
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