A reader wrote to us with this query,
My mother was a mutual fund distributor. Unfortunately, she died six months ago. Since she has made my father her nominee, he is getting the trail brokerage. Since I am a distributor too and want to service my mother’s clients, how can I transfer AUM or change nomination?
Meera Kumari, Dhanbad, Jharkhand
Dear Meera,
Nomination cannot be changed after demise of the deceased. Also, nominees or legal heirs are not permitted to get new business under the ARN of the deceased ARN holder.
Nominees continue to get commissions even if the ARN gets expired at a future date. Nominees continue to receive commissions till the AUM under the ARN becomes nil.
Nominees are allowed to transfer the assets with the consent of the investors.
You will have to intimate AMCs through a written communication about transfer of assets to the new ARN within family. Such a letter should contain the reason for transfer supported by documentary evidence, a specimen copy of the letter of intimation regarding the change of distributors sent to the clients and certification that the letter is sent to all existing clients along with a list of existing clients.
Similarly, a letter sent to your clients should comprise the reason for the change in ARN along with the details of new ARN code. You will have to explicitly mention that if clients have any objection, they can reach out to the respective AMCs directly.
AMCs will have to honour such a request within 15 days from the date of the distributor’s letter unless a client raises any objection.
Once AMCs complete the transfer of assets, you are required to submit a letter to AMFI for cancellation of your mother’s ARN along with original ARN card, certificate and letter of registration within 15 days of completion of transfer of AUM. Also, you are required to furnish a copy of letter that you have sent to AMCs requesting transfer your assets to the new ARN.
Once the transfer of AUM is done, the new distributor i.e. you will receive the trail commission. There will be no loss of brokerage. The new distributor will get trail commission on a prospective basis on valid assets. The trail commission rate would be the lower of commission on old ARN and new ARN.
