Mutual Fund nomination – SEBI Circular

Mutual fund investors will now have to submit nomination details or the declaration for opting out of the nomination.  This new SEBI rule for mutual fund nomination, will be effective from 1st October 2022.

The Securities and Exchange Board of India (SEBI), in a circular issued on June 15, 2022, had made it mandatory for subscribers to submit the nomination details or declaration to opt out of the nomination.

In short,

SEBI has given two options:
1. Register nominee in your account (folio)
2. Opt out nomination

As per the circular, the Asset Management Company (AMC) will have to provide an option to the subscribers to submit either the nomination form or the declaration form for opting out of the nomination in physical format or online format as per the choice of the unit holders.

In case you do not select any option, then your account will be freezed and you will not be able to sell your investment.

So, do check all your investment accounts (folios) and take action quickly.

Is it mandatory to add nominee in mutual fund?

For investors subscribing to mutual fund units on or after 01 October 2022, it will be mandatory to submit nomination details or the declaration for opting out of the nomination.

How many nominees are allowed in mutual funds?

Investors can also have multiple nominees, nominate up to three people in a mutual fund and choose the percentage to be given to each of the nominees

What happens if nominee not added to mutual fund?

Investments either without any nominees or without a ‘no-nominee’ declaration will be frozen.