The Securities and Exchange Board of India (SEBI) on Monday issued a circular stating that it will not freeze the mutual fund portfolios and demat accounts of investors for non-submission of nomination.
In a circular, the market regulator said, “The decision – for existing investors and unitholders – has been taken based on representations from the market participants, citing need for ease of compliance and investor convenience. Investors holding securities in physical form shall be eligible for receipt of dividend, interest payment or redemption payment, as well as to lodge grievances.”
Last year in December, SEBI had extended the deadline until June 30, 2024 for mutual fund investors to complete/update their nominations.
As per the circular, the investors will be able to avail any service request from their mutual fund registrar and transfer agent (RTA), even if ‘choice of nomination’ has not been submitted by those unit holders.
However, all new investors/unitholders shall be required to mandatorily provide the ‘Choice of Nomination’ for demat accounts and mutual fund folios, except for jointly held Demat accounts as well as mutual funds.
It urged all existing investors and unit holders to provide a choice of nomination in their own interest. This will ensure smooth transmission of securities held by them as well as to prevent the accumulation of unclaimed assets in the securities market.
Fortnightly communication through SMS and emails will be sent out to those investors and unit holders who have not provided the choice of nomination yet.
A pop-up shall also be provided on web/mobile application to investors by their Depositories while logging into the demat accounts, SEBI added.