Nomination deadline approaching soon: Check steps to nominate your demat accounts, mutual funds

Mutual fund investors and demat account holders trading in an individual capacity should mark September 30, 2023, on their calendars as a crucial deadline. The Securities and Exchange Board of India (SEBI) has made it mandatory for all such account holders to either furnish nomination declarations or opt out of nominations by this date. The National Securities Depository (NSDL) has also issued a reminder in this regard.

"Don't delay, start the nomination process now and secure the financial future of your loved ones," it said on the microblogging site X (formerly Twitter).

Existing investors who have already provided nomination details are not required to resubmit details. Those who have not submitted nomination details to date and intend to submit their nomination or opt out of nomination should do so.

Nomination is a process through which a securities holder designates who should receive their securities in the event of their death. It's a critical 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.

To claim the units after the death of a unitholder, the nominee has to complete the necessary formalities, such as completion of the KYC process, along with proof of death of the unit holder, signature of the nominee duly attested, furnishing of proof of guardianship in case the nominee is a minor, and such other document as may be required for transmitting the units in favour of the nominee(s).

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.

Only individuals can be nominees. Non-individual entities cannot be nominees.

Father, mother, spouse, siblings, children or any other individual can be made a nominee. A minor can also be added as a nominee, provided details of his/her guardian are provided.

Investors can have up to three nominees for one demat account, and they must specify the proportion (%) in which the securities should be transmitted upon the account holder's death. For example, if someone wants to add three nominees, he/she can give 50 percent to nominee 1, 30 percent to nominee 2 and 20 percent to nominee 3.

Investors can change the nominee(s) at any time by filling out a Nomination form and submitting it to the Depository Participant (DP) or via the online process.

Investors can submit or withdraw their nominations via two-factor authentication login on trading platforms for stock brokers or depository participants that offer such a service The details previously required, like mobile number, e-mail ID and identification details of the nominee/guardian of the minor nominee, have been made optional.

There is a declaration form which should be signed by the account holder. Nomination or declaration forms can also be filled online using the e-sign facility which does not require a witness signature until the account holder uses a thumb impression instead of a signature.

Investors can mention nominee details during the demat account opening process or later by filling out a nomination form and submitting it to the DP. If they need to change the nominee(s), they are required to fill out a new nomination form.

Nomination can also be done while investing in mutual funds, either during the initial application or subsequently by filling out the prescribed nomination form.

Step 1: First, log in to the demat account.

Step 2: Go to 'Profile segment' and navigate to 'My nominees'

Step 3: Choose 'add nominee' or 'opt-out'.

Step 4: Fill details and upload an ID proof of the nominee

Step 5: Enter the nominee share in percentage

Step 6: E-sign the document with Aadhaar OTP. The details of the nominee will be processed.

If investors miss the September 30 nomination deadline, SEBI may freeze debits from their holdings. This means they won't be able to withdraw from mutual funds or use their demat accounts for trading.