Ease of doing investments - Modified Norms for Nomination in Demat Accounts and Mutual Fund Folios
Summary
This circular modifies nomination norms for demat accounts and mutual fund folios to enhance investor on-boarding ease. It mandates nomination for new single accounts while making it optional for joint holdings, allowing up to three nominees. The document outlines digital and physical submission modes, specific data requirements, and obligations for regulated entities to facilitate these changes.
Text
For all single accounts / folios opened on or after the date of implementation of this Circular, the investor shall mandatorily provide nomination, unless declaration form for ‘opt-out’ is submitted as per format mentioned in the Circular.
Nomination will be optional for jointly held demat account/ folios.
The consent of all the joint-holders shall be required for providing or changing nominee regardless of mode of operations.
Investors can provide up to 3 nominees.
The regulated entities shall make the nomination form available to the investors as per the format provided in Annexure-A.
Validation shall be through: Digital Signature Certificate; or Aadhaar-based e-sign or by using any other e-sign facility recognized under Information Technology Act, 2000; or Two factor authentication (2FA) in which one of the factors shall be a One-Time Password (OTP) sent to the registered mobile number and email address of the investor.
The nomination form shall be signed under wet signature of the account / folio holder and signature of witness shall not be required. However, if the account / folio holder affixes his / her thumb impression (instead of wet signature), then the same shall be witnessed by two persons and details of such witnesses (name and address) shall be duly captured in the nomination form.
Mandatory information: Name of nominee and the nature of relationship of the nominee with the investor. Date of birth is mandatory, in case the nominee is a minor.
Where the percentage share of each nominee is not specified, the assets in the account / folio shall be apportioned among the nominees equally. Any odd lot after division shall be transferred to the first nominee mentioned in the form.
Investors may opt-out of nomination by: a) Filling up the declaration form for ‘opt-out’ as per format provided in Annexure-B; or b) Choosing the ‘opt-out’ option online; the regulated entity shall display the declaration message in Annexure-B.
Regulated entities shall provide acknowledgement to the investor for each and every instance of nomination / subsequent change.
In the periodic statement of account / holding statement furnished to the investor, the regulated entity shall print, either; a) name(s) of the nominee(s) or b) Yes / No - whether or not nomination has been made by the investor as per the choice exercised by investor in the nomination form.
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Source: SecMarx — Ease of doing investments - Modified Norms for Nomination in Demat Accounts and Mutual Fund Folios. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.