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Giving a much-needed relief to the MF industry, SEBI has put an end to the timeline to comply with the nomination guidelines and directed fund houses and RTAs not to freeze mutual fund folios in absence of nomination.
With this, non-compliant folios can continue to execute financial transactions like subscription/redemption and non-financial transactions like modifying mobile number, change in address and so on.
However, nomination is still compulsory in mutual funds. According to the nomination rules, mutual funds will have to compulsorily take a declaration from investors if they opt for nomination by filing it (opt in) with the MF application form or skip it (opt out).
SEBI said, “Non-submission of ‘choice of nomination’ shall not result in freezing of demat accounts as well as mutual fund folios. Payments including dividend, interest or redemption payment withheld presently by the listed companies/RTAs, only for want of ‘choice of nomination’ shall be processed accordingly.”
“All existing investors/ unitholders are encouraged, in their own interest, to provide ‘choice of nomination’ for ensuring smooth transmission of securities held by them as well as to prevent accumulation of unclaimed assets in the securities market,” said SEBI.
The regulator has asked RTAs and AMCs to encourage investors to complete their ‘choice of nomination’ through pop-ups on websites, mobile apps or platforms. However, pop up can only be pushed to non-compliant investors. The regulator has asked the industry to develop such a mechanism by October 1, 2024.
