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Business News/ Markets / SEBI prolongs the nomination deadline for demat accounts until December 31. All you need to know
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SEBI prolongs the nomination deadline for demat accounts until December 31. All you need to know

The decision to extend the deadline to December 31 this year is intended to assist investors in nominating their legal heirs, ensuring the protection and smooth transfer of their assets to the rightful recipients.

The deadline to affirm nomination details in all Demat accounts has been extended to December 31 this year.Premium
The deadline to affirm nomination details in all Demat accounts has been extended to December 31 this year.

Individual Demat account holders now have until December 31 to either nominate a beneficiary or choose to opt out by submitting a declaration form. Failure to do so will result in the freezing of their Demat accounts, preventing them from redeeming their investments. The initial deadline was September 30.

The Securities and Exchange Board of India (SEBI) has extended this mandate to both new and existing investors. The intention behind this move is to assist investors in safeguarding their assets and facilitating their transfer to legal heirs.

As per SEBI's regulation, new investors are required to either nominate their securities or explicitly opt out of nomination by submitting a declaration form when establishing trading and Demat accounts.

In a circular issued on March 27, 2023, the market regulator mandated that Demat account holders must either specify their 'choice of nomination' or opt out of nomination entirely. SEBI had previously cautioned that Demat accounts failing to make a decision would be subject to freezing starting on September 30, 2023.

On March 16, 2023, SEBI communicated similar directives to physical security holders in listed companies, requesting them to provide their PAN, nomination, contact details, bank account information, and specimen signatures associated with their respective folio numbers via a circular.

In its press release, SEBI stated that the submission of the “choice of nomination" for trading accounts has been rendered optional as a measure to promote ease of doing business.

Prior to this, back in July 2021, SEBI had requested all eligible existing trading and Demat account holders to submit their choice of nomination by March 31, 2022. Failure to do so would have resulted in the freezing of these accounts for debit transactions.

Moreover, SEBI additionally directed stock exchanges, depositories, Registrar and Transfer Agents (RTAs), and listed companies to “take requisite measures for the execution of the guidelines outlined in this circular" and to “oversee adherence to the directives provided in this circular".

According to market experts, numerous investment accounts were previously opened without designating beneficiaries for the assets in the event of unforeseen circumstances involving the account holders. This resulted in challenges for the rightful heirs who faced difficulties in the asset transmission process due to various documentation requirements and procedures.

 

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Published: 27 Sep 2023, 11:31 AM IST
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