The Securities and Exchange Board of India (SEBI) has announced a major revamp in nomination rules for mutual fund folios and demat accounts, effective March 1, 2025. These changes aim to reduce unclaimed assets and streamline the transmission of investments to rightful beneficiaries. Whether you're an individual or a joint account holder, these new rules affect how your assets will be passed on in case of unforeseen events.
Key Highlights – What Has Changed?
Nomination is Mandatory for Individual Holdings
All individual investors in mutual funds or demat accounts must either:
Submit a nomination form, or
Explicitly opt-out of nomination using the prescribed process
Joint Holdings
Nomination is optional for joint accounts
If one holder passes away, the surviving holders receive the assets
If all joint holders die simultaneously, the nominee(s) receive the assets, or else the legal heirs of the youngest holder do
Nominate up to 10 Persons
Investors can name up to 10 nominees
Specify share (%) for each nominee
If a nominee dies before the investor, their share is reallocated proportionally among surviving nominees
Minimum Documents Required for TransmissionOn the demise of the investor, only 2 documents are required to transfer the assets to the nominee(s):
Attested Death Certificate
KYC update or confirmation of the nominee(s)No affidavits, notarizations, indemnities, or undertakings needed
Support in Case of IncapacityInvestors can authorize one nominee (excluding minors) to operate their folio if they are physically incapacitated but mentally sound
What Do You Need to Provide in the Nomination Form?
To successfully nominate, provide the following specific details for each nominee:
Documents Required for Transmission After Investor’s Death
To transfer assets to the nominee:
Attested Death Certificate of the investor
Nominee’s KYC (can be done online or via physical form)
If pledged assets exist: Discharge Letter from creditor
No need for court documents, indemnities, or legal affidavits.
Frequently Asked Questions (FAQ)
1. I hold a mutual fund folio in my name only. Do I have to nominate?
Yes. You must nominate at least one person or explicitly opt out.
2. How do I opt out of nomination?
Either:
Submit a physical declaration form with wet signature, or
Use an online OTP-based declaration, followed by a video affirmation as per SEBI guidelines.
3. Can I change or cancel my nominee later?
Yes. Anytime, any number of times. There's no limit.
4. Is KYC of nominee mandatory?
No, but it must be completed, updated, or confirmed at the time of asset transmission.
5. What happens if I do not nominate anyone?
In such cases, upon your demise, the assets are passed to:
The legal heirs (as per succession laws), or
As per your Will, if available.
6. What if one of my nominees dies before me?
Unless updated, the deceased nominee’s share is automatically redistributed proportionally among surviving nominees.
7. I’m physically incapacitated. Can a nominee operate my folio?
Yes. If you’ve authorized a nominee for this purpose, they may transact on your behalf (subject to limits set by you).
8. What happens in joint holdings?
Surviving joint holders will get the assets.
If all joint holders die simultaneously:
Assets go to nominee(s), if registered
Else, to legal heirs of the youngest joint holder
9. What if not all nominees claim the assets?
The unclaimed portion will:
Remain in the same folio (no new transactions allowed), and
Be treated as unclaimed money, subject to further due diligence.
What You Should Do Next?
All investors must update their nomination or opt-out before this date to avoid compliance issues or service disruptions.Fynture's Suggestion:
Review your folios
Decide who should be your nominee(s)
Submit your nomination form or opt-out declaration at the earliest
Important Disclaimer
This article is intended for general informational purposes only. While we strive to provide accurate and up-to-date information based on the latest SEBI circular (SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/01650 dated Jan 10, 2025), regulations are subject to change.
Fynture shall not be held responsible for any actions taken or not taken based on this post. We strongly advise all investors to verify details with their fund house, depository participant, or legal advisor before making any decisions.