Ease of Doing Investments- Non submission of Choice of Nomination
Summary
This circular removes the freeze on demat accounts and mutual fund folios for existing investors who have not submitted a choice of nomination. It mandates that only three fields be provided for updating nomination details to ease compliance. The provisions regarding electronic payments and grievance lodging for physical security holders remain applicable, while new investors must still provide nomination details.
Text
SEBI extended the last date for submission of ‘choice of nomination’ for demat accounts and mutual fund folios to June 30, 2024 failing which demat accounts/folios shall be frozen for debits.
Security holders holding securities in physical form whose folio(s) do not have PAN, Choice of Nomination, Contact Details, Bank Account Details and Specimen Signature updated, shall be eligible to lodge grievance or avail any service request from the RTA only after furnishing PAN, KYC details and Nomination.
For any payment including dividend, interest or redemption payment in respect of such folios, only through electronic mode with effect from April 01, 2024.
Non-submission of ‘choice of nomination’ shall not result in freezing of Demat Accounts as well as Mutual Fund Folios.
Securityholders holding securities in physical form shall be eligible for receipt of any payment including dividend, interest or redemption payment as well as to lodge grievance or avail any service request from the RTA even if 'choice of nomination' is not submitted by these securityholders.
Payments including dividend, interest or redemption payment withheld presently by the Listed Companies/RTAs, only for want of ‘choice of nomination’ shall be processed accordingly.
Notwithstanding the above, all new investors/unitholders shall continue to be required to mandatorily provide the 'Choice of Nomination' for demat accounts/ MF Folios (except for jointly held Demat Accounts and Mutual Fund Folios).
All existing investors/ unitholders are encouraged, in their own interest, to provide ‘choice of nomination’ for ensuring smooth transmission of securities held by them as well as to prevent accumulation of unclaimed assets in securities market.
Depository Participants and AMCs and RTAs shall encourage the demat account holders/ mutual fund unit holders to update ‘choice of nomination’ by sending a communication on fortnightly basis by way of emails and SMS to all such demat account holders/ mutual fund unit holders who have not provided the ‘choice of nomination’.
A pop-up shall be provided on web/mobile application/platform to the investors by Depositories and Depository Participants while logging into the Demat Account and by AMCs while logging into their MF account. This pop-up may be shown only to those clients whose MF Folios/demat account(s) do not have 'choice of nomination'.
The provisions of this circular, except clause 7 above, shall come into effect immediately in supersession of existing provisions. Further, Clause 7 of this circular shall be applicable from October 01, 2024.
Stock Exchanges, Depositories, AMCs, RTAs and Listed Companies are further advised to take necessary steps to implement the provisions of this circular, bring the provisions to the notice of their respective constituents, communicate implementation status to SEBI, and monitor compliance.
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Source: SecMarx — Ease of Doing Investments- Non submission of Choice of Nomination. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.