Capital markets regulator Securities and Exchange Board of India (SEBI) has extended the deadline for mutual fund and demat account holders till June 30, 2024 to nominate a beneficiary or opt out of it. Earlier, the deadline for the same was December 31, 2023.
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“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 June 30, 2024,” SEBI said in a circular.
If investors miss the nomination deadline, SEBI may freeze debits from their holdings. This means investors won't be able to withdraw from mutual funds or use their demat accounts for trading.
Importance of nomination
Nomination is a process through which a securities holder designates who should receive their securities in the event of their death.
It's a step to ensure that the investments are transferred smoothly to the chosen beneficiaries. Without nomination, the investments may be subject to lengthy and potentially costly legal procedures.
The nomination process
Adding a nominee to a demat account involves a few steps. Investors can log in to their demat accounts, proceed to the 'Profile Segment,' and navigate to the 'My Nominees' section.
From there, the option to 'add nominee' or 'opt-out' is available.
Adding details of the nominee, including an uploaded ID proof, percentage share allocation, and an e-signature via Aadhaar OTP, complete the process.
Only individuals holding demat accounts singly or jointly can nominate. Non-individual entities like societies, trusts, corporations, partnership firms, Hindu Undivided Families, and holders of Power of Attorney cannot nominate.
Joint holders can nominate, but if one of them passes away, the securities will be transmitted to the surviving holders unless there is a nominee.
NRIs can nominate directly, but power of attorney holders cannot nominate on their behalf. Minors cannot nominate either directly or through a guardian.
First Published: Dec 28, 2023 8:48 AM IST
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