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  • Ask Us MFDs have to appoint their nominee at a fund house level

    MFDs have to appoint their nominee at a fund house level

    Ask us: There is no centralized or online system to make nomination against ARN.
    Nishant Patnaik Feb 28, 2024

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    One of our readers write to us with this query:

    I would like to add nominees against my ARN. I want to understand if I can nominate through a centralized system. In addition, how many nominees can I appoint. Also, I want to know that if my nominee will receive trail commission in my absence.

    Name withheld on request

    Dear MFD,

    Currently, MFDs have to submit a physical nomination form at the fund house level. There is no centralized and online system to make nomination against ARN. In addition, making changes in nominee details entails a complicated offline process.

    Experts believe that centralized nomination may not be available anytime soon in the MF industry as the distributors and AMCs enter into a bilateral contract at the time of empanelment and the trade body like AMFI has no role to play here.

    In terms of trail income, nominee/nominees are entitled to get trail income on assets built before the death of the MFDs. However, if the nominee wishes to get trail on all assets, she has to appear for NISM examination and obtain ARN within six months of death of the deceased MFD.

    While you can nominate multiple nominees across fund houses, in our view, you should nominate only one person as the nominee against your ARN. According to the existing ARN transfer norms, all the nominees will have to obtain ARN to continue distribution business of the deceased MFD.

    For instance, if an MFD appoints more than one nominee, let’s say, you appoint your son and your spouse as the nominees, the share of trail commission on assets built before the death of MFDs will be segregated among all nominees (between both) in the proportion given by the MFD. If the MFD has not mentioned any proportion, his assets will be divided equally among nominees.

    In this case, both your son and spouse have to appear for NISM examination and obtain new ARN to continue your business.

    Hope we have addressed your query.

    Regards,

    Team Cafemutual

    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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    5 Comments
    Shanmugam S B · 8 months ago `
    Hi
    When they are able to fetch all the information about MFD from one location, why can't Nominee to be the similar way instead of need to update at level Each AMC Level

    I count not understand this logic. I have been observing the rules are always making the MFD life difficult. Quote an example, when an Investor not completed the KYC (whatever be the reason), MFD commission has withheld. All other stake holders continue to enjoy their pie.

    Whether AMC is not liable for completion of KYC, why can't we make the rule that if an investor not completed the KYC within the stipulated time then their fund (irrespective of Scheme they have invested) will be frozen. i.e it won't participate in the market movement

    Then they will come up fast to complete their KYC

    I am seriously worried about this attitude again MFD Community, who are contributing more than 45% of business to the industry, they should have celebrated rather than putting into hardship
    anil kumar · 8 months ago
    truly said
    anil kumar · 8 months ago
    in Normally 20-30 AMC we are investing through our MFD business, So 30 Nomination, is it possible offline, All rules are always making the MFD life difficult.. even after death, AMFI should take SUO - MOTO in favour of MFD communities, Better we should make a Pvt. LTD company to run business normally... need to consult with our CA for this, i am not sure.
    Reply
    Vivek Mallik · 8 months ago `
    Agree with Shanmugam Sir. I am a sub-broker with a ND. I don't know how this will affect my case.
    But for individual MFD, when you fill the empanel form, don't the AMCs ask for nomination? I mean, nomination should be part of the empanelment form. And MFDs on board of AMFI should strive to make empanelment and nomination centralized at AMFI level when we obtain or renew ARN.
    Sunil Lalge · 8 months ago `
    Nomination is part of empanelment process.
    With any AMC you empanelment online, they fetch all your major data form AMFI, then they also ask for nomination, just enter the details and submit. That's all
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