Mumbai (Maharashtra) [India], June 10 (ANI): The Securities and Exchange Board of India (SEBI) has announced significant changes to the rules regarding the submission of the ‘choice of nomination’ for demat accounts and mutual fund folios.
In a move aimed at easing investment procedures and improving investor convenience, SEBI has decided to do away with the freezing of accounts and folios for existing investors who have not submitted their nomination details.
SEBI has issued a new circular that extends the deadline for existing investors to submit their ‘choice of nomination’ for demat accounts and mutual fund folios to June 30, 2024.
This extension ensures that demat accounts and mutual fund folios will not be frozen for debits due to non-submission of nomination details. This decision is aimed at preventing any disruption to investors’ access to their funds and securities.
Investors holding securities in physical form, who have not yet updated their PAN, choice of nomination, contact details, bank account details, or specimen signature, will no longer face restrictions.
These security holders will be eligible to receive payments, including dividends, interest, or redemption amounts, through electronic modes from April 1, 2024.
Listed companies will notify security holders of such payments electronically, contingent on their compliance with the updated requirements.
To simplify the process for existing investors, SEBI has reduced the mandatory fields for updating nomination details to just three.
This move is part of SEBI’s efforts to streamline the compliance process and encourage more investors to provide their nomination details.
SEBI’s circular emphasizes that existing investors and security holders must update their ‘choice of nomination’ to ensure the smooth transmission of securities and prevent the accumulation of unclaimed assets in the securities market.
Despite the relaxation of certain rules, SEBI encourages investors to comply with the nomination process for their benefit.
Security holders with physical folios can now lodge grievances or service requests with the Registrar and Transfer Agents (RTAs) without submitting a ‘choice of nomination.’
Payments for dividends, interest, or redemptions will also proceed without these details.
Depository participants, Asset Management Companies (AMCs), and RTAs will send fortnightly reminders via email and SMS to demat account holders and mutual fund unit holders who have not provided their nomination details.
Additionally, a pop-up reminder will appear when logging into demat or mutual fund accounts, prompting investors to update their nomination information. This feature will be available starting October 1, 2024.
The provisions of the new circular, except for the pop-up reminders, will come into effect immediately. Clause 7, which pertains to the pop-up reminders, will be implemented from October 1, 2024.
Stock exchanges, depositories, AMCs, RTAs, and listed companies are required to take necessary steps to amend their relevant bye-laws, business rules, and regulations to implement the new provisions.
They must also ensure that the new rules are communicated to their constituents and monitor compliance with the updated regulations.
Despite the relaxed measures for existing investors, all new investors and unitholders must still mandatorily provide the ‘choice of nomination’ for demat accounts and mutual fund folios, except in cases of jointly held accounts and folios.
The formats for providing or opting out of nomination are detailed in Annexure-A and Annexure-B of the circular.
This circular reflects SEBI’s commitment to protecting investor interests and promoting a seamless, transparent securities market.
By easing the nomination submission process, SEBI aims to enhance investor convenience and encourage a broader compliance with essential regulatory requirements. (ANI)
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