Nominees of mutual fund distributors need not hold an ARN to claim upfront/trail commission.
Just like mutual fund investors appoint nominees, distributors too can appoint their nominees. Thus, nominees become entitled to receive commissions after their demise of the ARN holder. Here are a few things which distributors should know about appointing their nominee.
Can a distributor’s nominee get commission on SIPs?
Earlier the nominees were not allowed to get any commission on SIP investments post demise of the ARN holder. On March 2013, AMFI has come out with a circular which allows trail commission to be paid to the nominees or legal heirs (where no nominee is registered) of the deceased distributor on SIP investments.
Can nominees tweak systematic transactions?
Nominees are not allowed do add or make changes to existing systematic transactions under the ARN code of the deceased distributor.
What if the nominee is not registered by the ARN holder?
In such cases the legal heirs have to furnish death certificate and documents which prove that the nominee is the legal heir of the ARN holder.
What should nominees do after the demise of the ARN holder?
Nominees/legal heirs need to intimate AMFI by furnishing a death certificate which is attested by a gazetted officer. AMFI will then inform all the AMCs about the same.
Can nominees or legal heir procure new business?
Nominees or legal heirs are not permitted to get new business under the ARN of the deceased ARN holder.
Can the nominee get trail/upfront on the business procured after the ARN has expired?
Nominees can get trail/upfront commission only on those assets which were procured when the ARN of the deceased was valid and was not suspended by AMFI.
Do nominees continue to get commission if the ARN is about to expire?
Yes. 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.
How can nominees transfer the assets under advisory to their account?
Nominees are not allowed to transfer the assets to their account without the consent of the investors. Nominees can do so provided they have a valid ARN code and the permission of investors.
Is it applicable to all distributors?
These guidelines are applicable for individuals/sole proprietors only. Also, they do not apply to overseas distributors.
