Vide Circular dated 10th January 2025, SEBI revised and revamped the norms for nomination for demat accounts and mutual fund (MF) folios and to prevent the generation of unclaimed assets in the Indian securities market.
The circular covers various aspects of nomination to be complied by
[1] Asset Management Companies (AMCs) of Mutual Funds (MFs) and their Registrars to an issue and share Transfer Agents (RTAs)
[2] Association of Mutual Funds in India (AMFI)
[3] Recognized Depositories [4] Registered Depository
Participants hereinafter collectively referred to as Regulated entities.
Section A of the Circular reiterates the existing norms to ensure a uniform approach across the Securities Market, while Section B details the revamped norms.
The circular outlines the rules of survivorship in case of single or joint account holders, accounts/folios held by Hindu Undivided family [HUF] etc.
It is now possible for an Investor to nominate up to 10 persons in the account/folio, however a Power of Attorney Holder of the Investor cannot nominate on behalf of the Investor.
The circular interalia, provides for broad guidelines to be followed for operation of accounts in case of an incapacitated investor.
In order to have uniformity while dealing with incapacitate investors and those with special needs or sick or old investors in the securities market, the Depositories and AMFI are directed to put in place a common Standard Operating Procedure (SOP), which will inter-alia, have adequate guardrails and shall be made available on their websites as well as that of their constituents.
Notwithstanding what has been stated earlier, a Power of Attorney holder can continue to transact in the account / folios of an investor, subject to the applicable norms.
This circular shall come into effect from 1st March 2025.
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