Amendments and clarifications to Circular dated January 10, 2025 on Revise and Revamp Nomination Facilities in the Indian Securities Market
Summary
This circular provides clarifications and amendments to SEBI's January 10, 2025 directive on nomination facilities for demat accounts and mutual fund folios. It outlines specific operational procedures for joint account transmissions, KYC requirements during transmission, and investor options for opting out of nominations. The document also mandates phased implementation timelines for AMFI and Depositories to report readiness and compliance status. This section details the phased implementation schedule for specific circular clauses, with Phase II effective June 1, 2025, and Phase III effective September 1, 2025. It includes Annexure A, a nomination form for demat accounts and mutual fund folios, outlining mandatory and additional details required for nominees. The annexure further specifies transmission aspects, rights of investors and nominees, and procedures for asset distribution upon the demise of account holders.
Text
In case of joint accounts / holdings, upon demise of one or more joint holder(s), the regulated entity shall transmit the assets held to the surviving joint holder(s) vide name deletion of the deceased holder(s). However, the regulated entity shall provide the option to surviving joint holder(s) to transmit the assets held, into another existing or new account / folio.
An investor having single holding / account / folio can opt-out of nomination, either online or through physical / offline mode.
An investor having single holding / account / folio can, at any point of time, empower any one of the nominees (excluding minor nominee) to operate the investor’s account / folio, in the event where the investor is physically incapacitated, but still has the capacity to contract.
The regulated entities shall not seek the KYC of the surviving holder(s) as a precondition for transmission. In other words, the regulated entities shall not reject transmission vide name deletion to the surviving joint holder(s) for non-submission of KYC details, unless the regulated entities had previously sought the KYC documents from the holder(s) and the same were not provided by them.
The surviving joint holder(s) shall have the option to update the residential address(es), mobile number(s), email address(es), bank account detail(s), annual income and nominee(s), either at the time of transmission or at a later date.
In case a joint account / folio becomes single holding, post the demise of holder(s), then either nomination or ‘opt-out’, is mandatory.
Credit transactions (including through corporate actions) shall be permitted in such accounts / folios.
For an investor who opens a new account / folio through online mode, the opt-out shall be through online mode. For an investor who opens a new account / folio through offline / physical mode, the opt-out shall also be through offline / physical mode.
In case of demat accounts, the online mechanism for existing and new investors, who want to opt-out of nomination, shall be provided by the Depository Participants (DP) and not the Depositories.
Any odd lot after division / fraction of %, shall be transferred to the first nominee mentioned in the nomination form.
However, in case of NRI / OCI / PIO, Passport number is acceptable.
The provisions of Clause 3.5.1 shall be applicable for a joint account / folio in the event where all the holders are simultaneously incapacitated.
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Source: SecMarx — Amendments and clarifications to Circular dated January 10, 2025 on Revise and Revamp Nomination Facilities in the Indian Securities Market. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.