No Freeze On Demat Accounts And Mutual Fund Folios Over Nomination Issues, Says SEBI

SEBI clarified that investors holding securities in physical form will continue to receive dividends, interest payments, or redemption payments, and will be able to lodge grievances without hindrance

Last December, SEBI extended the deadline for mutual fund investors to complete or update their nominations until June 30, 2024.

Source : PTI

The Securities and Exchange Board of India (SEBI) has announced that it will not freeze mutual fund portfolios and Demat accounts of investors who have not submitted their nominations. This decision applies to existing investors and unitholders and is aimed at easing compliance and enhancing investor convenience, following representations from market participants.

In its circular, the SEBI clarified that investors holding securities in physical form will continue to receive dividends, interest payments, or redemption payments, and will be able to lodge grievances without any hindrance.

Last December, SEBI extended the deadline for mutual fund investors to complete or update their nominations until June 30, 2024. Despite the new guidelines, investors will still be able to request services from their mutual fund registrars and transfer agents (RTAs) even if they have not submitted a 'choice of nomination.'

However, SEBI said that all new investors and unitholders must mandatorily provide the 'Choice of Nomination' for Demat accounts and mutual fund folios, with the exception of jointly held Demat accounts and mutual funds.

The circular includes formats for providing nomination details or opting out of nominations. SEBI has urged all existing investors and unitholders to provide their 'choice of nomination' to ensure smooth transmission of their securities and to prevent the accumulation of unclaimed assets in the securities market.

To encourage compliance, SEBI will send fortnightly communications via SMS and email to investors and unitholders who have not yet provided their 'choice of nomination.' Additionally, a pop-up reminder will be displayed on web and mobile applications by depositories when investors log into their Demat accounts.

Meanwhile,  a plea has been filed in the top court seeking directions to Centre and SEBI to provide a detailed report on the June 4 Market crash and the loss of investors after the election results were announced.