The SEBI on June 15 said that investors subscribing to mutual fund units from August 1 would have the choice of providing nominations or opting out of the nomination. The SEBI circular said, “All the AMCs are advised to set deadline as March 31, 2023, for nomination/opting out of a nomination for all the existing individual unit holder(s) holding mutual fund units holder solely or jointly as mentioned at para 1 above, failing which the folios shall be frozen for debits.”
The market regular says that AMCs must provide an option to the unit holder to submit either the nomination form or the declaration form for opting out of the nomination physical or online.
Is It Mandatory To Nominate?
It was mandatory earlier, but on June 15, the SEBI changed the law and allowed investors to invest without specifying a nominee. Investors can now choose to either provide a nomination or opt-out through a signed declaration form.
Who Can Be A Nominee?
An investor can nominate anyone who is a friend, family or a minor. In the case of a minor, details of the guardian’s minor are required. Even a non-resident Indian (NRI) can be a nominee, subject to the exchange control rules in force. Investors can also make a nomination in favour of the State Government, Central Government, a local authority or a charitable trust.
What Lies Ahead?
SEBI’s move aims to bring uniformity in practices across all constituents in the securities market. Last year, SEBI gave a similar choice for investors opening new trading and Demat accounts.