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Business News/ Money / Personal Finance/  Hold a joint mutual fund account? Sebi makes the nomination process voluntary. Details here
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Hold a joint mutual fund account? Sebi makes the nomination process voluntary. Details here

Exactly two months before the expiry of the deadline for nominating a nominee for mutual fund folios, Sebi made the process optional for investors who hold accounts in joint mutual fund folios

Sebi extended the Sep 30, 2023 deadline of providing nomination first to Dec 31, and later to June 30 Premium
Sebi extended the Sep 30, 2023 deadline of providing nomination first to Dec 31, and later to June 30

Investors who hold joint mutual fund folios have a reason to cheer. The capital markets regulator, the Securities Exchange Board of India (Sebi), has announced to grant an exemption (not an extension!) from nominating a nominee to the jointly-held mutual fund folios.  

This means that investors who hold joint mutual fund accounts do not need to nominate a nominee to prevent their accounts from being frozen after June 30, 2024.

The requirement of providing nomination is prescribed in the master circular released on May 19 last year, which states that investors should either nominate a nominee, or opt out of the nomination process.

Later, Sebi constituted a working group to review this regulatory framework of mutual funds, wherein investors are required to choose one of the two options (give nomination or opt out) before June 30, as described above.

After these recommendations, Sebi caried out public consultations, and a set of guidelines were released. Finally, the regulator announced that the requirement of providing nomination details is no longer mandatory for the jointly-held mutual fund folios. 

This decision was conveyed through a circular released by Sebi on April 30 and signed by Peter Mardi, Deputy General Manager in Investment Management Department. 

Nomination deadline extended twice

In the Master Circular for Mutual Funds dated May 19, 2023, Sebi instructed all asset management companies (AMCs) to designate September 30, 2023, as deadline for nomination or opting out of nomination for all the current investors holding mutual fund units, whether solely or jointly. 

ALSO READ: SEBI extends deadline for demat and mutual fund nomination. Check new date here

Sebi extended the deadline of September 30 for providing a nomination first to December 31, 2023, and later to June 30, 2024. 

This was announced in a bid to bring uniformity in practices across all constituents in the securities market, Sebi stated in the master circular.

The master circular also mentioned that asset management companies (AMCs) and registrar and transfer agents (RTAs) would encourage unit holders to fulfill the nomination requirement by sending fortnightly communications via email and SMS to those unit holders who are not in compliance with the nomination requirement.

Failing to nominate or opting out would result in the folios being frozen for debits. 

The market regulator instructed AMCs to provide unit holders with the option to submit either the nomination form or the declaration form for opting out of nomination, either physically or online.

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Published: 02 May 2024, 06:13 PM IST
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