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Informist, Friday, May 29, 2026

NEW DELHI – The Securities and Exchange Board of India has issued a circular to revise and revamp nomination facilities in the Indian securities market, covering demat accounts and mutual fund folios. The new norms, aimed at easing investor on-boarding and streamlining the nomination process to prevent unclaimed assets, will come into effect from Sept. 1.

SEBI has modified nomination norms after receiving representations from stakeholders citing operational challenges in implementing nomination facilities. Under the revised norms, nomination will be mandatory for all single-holder accounts or folios, unless the investor submits an 'opt-out' declaration in the prescribed format. For jointly held demat accounts and folios, nomination will remain optional. Any addition or change of nominee in joint accounts will require the consent of all holders, irrespective of the mode of operation, the regulator said.

Investors can submit nominations either online or offline. For online nominations, entities offering the facility must follow the annexure-A format, with validation either through a digital signature certificate, aadhaar-based e-sign or e-sign recognised under the Information Technology Act 2000, or two-factor authentication, with one factor being an OTP sent to the investor's registered mobile number and email address.

"For physical or offline nomination, the nomination form shall be signed under wet signature of the account or folio holder and signature of witness shall not be required," SEBI said. "However, if the account or folio holder affixes his or her thumb impression (instead of wet signature), then the same shall be witnessed by two persons and details of such witnesses (name and address) shall be duly captured in the nomination form."

The nomination form must capture the nominee's name and relationship with the investor as mandatory information, SEBI said. Date of birth is also mandatory if the nominee is a minor. Optional details include the nominee's mobile number, email address, percentage share of each nominee, know your customer or identifier of the nominee, and guardian details if the nominee is a minor.

If an investor does not specify the percentage share for each nominee, assets in the demat account or folio will be distributed equally among nominees. Any odd lot after division shall be transferred to the first nominee mentioned in the form, according to SEBI circular.

Investors can opt out of nomination either by submitting the 'opt-out' declaration form in the format provided in annexure-B, or by choosing the opt-out option online. For online opt-out, the regulated entity must display the declaration message from annexure-B, and the investor must agree to it to proceed without nomination.

Investors can provide, change, or cancel nominations any number of times. The same annexure-A and annexure-B forms will apply for any subsequent change or cancellation, including for existing investors. Regulated entities must issue an acknowledgement to the investor for every instance of nomination or change.

Regulated entities must disclose the nomination status in periodic account or holding statements sent to investors, the regulator said. Entities must either print the name of the nominee, or indicate "Yes" or "No" on whether nomination has been made, based on the choice exercised by the investor in the nomination form.
 

For both existing and newly opened demat accounts and mutual fund folios without a nomination, including those who have opted out, depository participants and MF Registrars to an issue and share Transfer Agents must send bi-annual emails and short message service, nudging investors to provide a nomination, SEBI said. They must also display a pop-up message on the benefits of nomination on web or mobile platforms during the first log-in of the day. The messages and pop-ups will not apply to investors who have already provided a nomination. These norms will apply mutatis-mutandis to existing accounts and folios as well. Regulated entities have been directed to implement or upgrade systems to provide these facilities as per the circular.  End

Reported by Vaishali Tyagi

Edited by Deepshikha Bhardwaj

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