AMFI has come up with uniform policy for conversion of minor to major accounts. With this, fund houses are no longer allowed to accept fresh money or honour redemption once the minor turns major till his/her KYC is complete.
So far, the industry has not had a uniform policy to deal with minor to major accounts. Hence, a few AMCs were allowing transactions or accept fresh money even after the minor turns major.
Let us look at the fresh set of norms to deal with minor to major accounts
- When the units are held on behalf of minor, the ownership of units vest with the minor. The guardian can operate minor’s account until the minor reaches the age of majority
- When a minor turns a major, he needs to submit an application to change his status from minor to major along with KYC documents like PAN, address proof, bank details and so on
- AMCs cannot honour any financial transactions like lumpsum, SIPs, STPs and SWPs and non-financial transactions like name change on such accounts till the completion of KYC process
- However, AMCs will have to pay dividend to the minor’s bank account even if he turns major and his KYC is pending
- Things to keep in mind before applying to change status from minor to major or minor attaining major (MAM) form: Obtain a PAN card, complete KYC process, change status of existing bank account from minor to major or open a new account immediately with new cheque book (name printed on it)
- Documents required along with MAM form: Signature of applicant duly attested by the parent or guardian whose signature is registered in the records of the mutual fund or notary officer of judicial magistrate first class, copy of PAN, KYC acknowledgment, a cancelled cheque leaf, signature attested by the bank, nomination form, a fresh SIP, STP or SWP mandate
Norms on investment on behalf of minors
- There will be only one sole owner i.e. minor. Joint holding is not allowed in minor accounts
- Guardian in such folios should be father or mother or any other person appointed legal guardian. A document evidencing the relationship with minor has to be produced
- Documents required for opening minor account: Attested photocopy of birth certificate or school leaving certificate or mark sheet issued by higher secondary board or passport of the minor or any other suitable proof evidencing date of birth of the minor
- Standing instruction like SIP, SWP or STP only till the date of minor attaining majority
Norms requesting change of guardian
- Generally, minor requests to change his guardian when his parents part ways (divorce) or in case of demise of existing guardian
- An application for change in guardian of the minor unitholder in a standard form along with PAN card, KYC acknowledgment of new guardian and cancelled cheque
- A consent letter from existing guardian or court order for new guardian if the existing guardian is alive
- A copy of death certificated of deceased guardian attested by notary public or judicial magistrate first class or gazetted officer. AMC official can also attest such a certificate after verifying the original
- The new guardian has to be his guardian in respect of registered bank account of minor
