SEBI Extends Deadline For Mutual Fund Investors, Demat Account Holders To Add Nominees To September 30

The mandate requires investors to nominate a beneficiary or opt out of it by providing a declaration form, failing which their demat accounts and folios will be frozen.

Experts noted that in the past many rightful heirs have found it very difficult to get the assets transferred to them as the different kinds of documentation required made the entire process a hassle for them. 

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The Securities and Exchange Board of India (SEBI) extended the deadline to add nominees for individual demat account holders and mutual fund investors till September 30. The regulator’s mandate requires investors to nominate a beneficiary or opt out of it by providing a declaration form. If investors fail to comply with the norms, their demat accounts and folios will be frozen and they will not be able to redeem their investments, the regulator informed.

The mandate is applicable to both new and existing investors, reported PTI. The market regulator has adopted this measure to help investors to secure their assets and forward them on to their legal heirs, in case of any unforeseen circumstances. The ruling requires new investors to either nominate their assets or formally opt out of nomination via a declaration form when they open trading and demat accounts. 

Notably, earlier in July 2021, Sebi mandated all existing trading and demat account holders to give a choice of nomination before March 31, 2022. This deadline was extended by one year till March 31, 2023. 

For mutual unit holders, the regulator issued a circular asking all mutual fund investors to provide nomination details or opt out of the process formally by August 1, 2022. This deadline was also provided an extension up to October 1, 2022, and again till March 2023. 

Explaining Sebi’s reasoning behind the move, Feroze Azeez, Deputy CEO at Anand Rathi Wealth said, “The initiative is crucial because it emphasizes the importance of proper financial planning and safeguarding investments in the event of an investor's untimely demise. By adding nominees to their folios, investors are ensuring that their investments will smoothly pass on to their chosen beneficiaries. The deadline serves as a proactive measure to protect investors' interests and provide them with the peace of mind that their investments will benefit their loved ones as intended. Overall, this move by Sebi promotes responsible financial management and secures the future of investors and their families, making it a significant and commendable regulatory action.”

Experts further noted that in the past many rightful heirs have found it very difficult to get the assets transferred to them in the event of the death of the account holder as the different kinds of documentation required made the entire process a hassle for them. 

Tejas Khoday, co-founder and CEO at FYERS, added, “Investors can nominate up to three beneficiaries for their demat account, either online or offline. They can also change or cancel their nomination at any time. However, they can also opt out of nomination by submitting a declaration form, but this is not recommended.”