Mutual Fund News : Investor Alert! Subscribing to Mutual Funds from 1st August will Allow Choice Of Providing Nomination: SEBI

Publish Date:

Capital markets regulator SEBI in a circular dated June 15, 2022 mentioned: Nomination for Mutual Fund Unit Holders.

In order to bring uniformity in practices across all constituents in securities market, the following is decided in case of nomination for eligible Mutual Fund Unit Holders:

Investors subscribing to mutual fund units on or after August 01, 2022, shall have the choice of:

  • Providing nomination in the format specified in fourth schedule of SEBI (Mutual Funds) Regulations, 1996 (or)

  • Opting out of nomination through a signed Declaration form as provided in Annexure - A to this circular.

AMC shall provide an option to the unit holder(s) to submit either the nomination form or the declaration form for opting out of nomination in physical or online as per the choice of the unit holder(s). In case of physical option, the forms shall carry the wet signature of all the unit holder(s) and in case of online option, the forms shall be using e-Sign facility recognized under Information Technology Act, 2000, instead of wet signature(s) of all the unit holder(s).

All AMCs shall ensure that adequate systems are in place for providing the e-Sign facility and take all necessary steps to maintain confidentiality and safety of client records.

Further, all existing MF folios held in a single name or jointly need to have a nominee or an explicit opting-out declaration. The fund houses have been advised to set deadline as March 31, 2023. Mutual Fund folios without nomination or an opting-out declaration will be frozen and investors cannot sell their units in such folios.

This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.