New Nomination Rules For Demat Accounts, Mutual Funds: Check SEBI Order

SEBI (Securities and Exchange Board of India) has introduced new guidelines for nominations in the securities market to make investing safer and reduce complications. These rules apply to mutual funds, demat accounts, and related services, aiming to simplify asset transfer processes while minimising disputes and unclaimed funds. The updated norms will come into effect on March 1, 2025.

Nomination Made Mandatory for Single Accounts
Under the new rules, nominations are now mandatory for single-holder accounts, while joint accounts remain optional. This ensures that if the account holder passes away, the assets can be smoothly transferred to the nominee(s) without delays.

In joint accounts, if one holder dies, the surviving holder(s) automatically inherit the assets. If all joint holders pass away simultaneously, the nominee(s) or the legal heirs will receive the assets, depending on the nomination status.

Online and Offline Nomination Options
SEBI has made it easier for investors to file nominations. Investors can submit nomination forms either online or offline. Online submissions will require secure authentication methods such as:
Digital signatures,
Aadhaar -based e-signatures, or
Two-factor authentication using OTPs.
For offline submissions, signatures or thumb impressions must be verified by witnesses or supported by the e-signatures.

Simplified Asset Transmission
If an account holder passes away, nominees will now only need a self-attested death certificate and updated KYC details to claim the assets. SEBI has prohibited regulated entities from demanding extra documents like affidavits or indemnities, making the process simpler for families during difficult times.

Nominees will act as trustees for the legal heirs, ensuring a fair distribution of assets if disputes arise. If multiple nominees are listed, the assets will be distributed based on specified percentages or equally if not mentioned.

Implementation and Future Readiness
SEBI has directed all depositories and mutual fund organizations to upgrade their systems by March 2025 to align with the new guidelines. Existing investors will be given a chance to update their nominations.