SEBI extends nomination deadline for mutual funds and demat accounts

SEBI has announced an extension of the deadline for mutual fund and demat account nomination, providing investors with additional time until June 30, 2024, to finalize their nominations. This decision comes as a result of representations received from market participants, aimed at facilitating compliance and enhancing investor convenience. Investors are now required to either select a nominee or explicitly opt out of the nomination process by submitting a declaration before the revised deadline.

The circular issued by SEBI on December 27 highlights the regulator's commitment to accommodating the needs of investors and streamlining the nomination process. This extension marks a continuation of previous deadline adjustments, as SEBI had previously postponed the deadline from September 30 to December 31.

Failure to complete the nomination process by the set deadline could have resulted in freezing investors' mutual fund folios or demat accounts for debits, restricting their ability to make redemptions or withdrawals. Notably, as of September-end 2023, approximately 25 lakh PAN holders had not updated their nominations in mutual fund folios, according to data from the registrar and transfer agent (RTA) CAMS.

Nomination holds significance in facilitating the transmission of assets to the next of kin in the event of the investor's demise. Without a designated nominee, the transmission process can become intricate and pose challenges for the beneficiaries. Investors are urged to take advantage of the extended timeline to ensure the completion of their nomination procedures for mutual fund folios and demat accounts.