Executive Summary:
This circular from SEBI addresses nomination for eligible trading and demat accounts, in accordance with Section 72 of the Companies Act, 2013. Investors opening new accounts from October 1, 2021, must choose to either provide a nomination or opt-out. Existing account holders must provide their choice by March 31, 2022, or their accounts will be frozen.
Key Points / Main Content:
New Account Nominations:
* Investors opening new trading/demat accounts on or after October 1, 2021, must either provide a nomination or opt-out.
* Nomination form (Annexure A) or opt-out declaration form (Annexure B) must be used, including for changes or withdrawals.
* New accounts will be activated from October 1, 2021, only upon receipt of these forms.
Form Requirements:
* Forms require wet signatures from account holders; witness signatures are not required unless a thumb impression is used.
* Online forms can use eSign, waiving the need for a witness.
* Intermediaries must ensure systems are in place for eSign and maintain client record confidentiality.
Existing Account Nominations:
* Existing account holders must provide their choice of nomination by March 31, 2022.
* Failure to nominate by the deadline will result in trading accounts being frozen for trading and demat accounts being frozen for debits.
Directives for Stock Exchanges, Depositories, and Intermediaries:
* Implement the circular's provisions and amend relevant regulations.
* Inform constituents about the circular and disseminate it on their websites.
* Report implementation status to SEBI in the Monthly Development Report.
* Monitor compliance with the circular.
Impact Analysis:
Stock Exchanges and Depositories:
* Impact: Required to amend byelaws, business rules, regulations, and operational instructions to align with the circular.
* Action Required: Implement necessary changes, inform constituents, disseminate the circular, report implementation status, and monitor compliance.
Stock Brokers and Depository Participants (Intermediaries):
* Impact: Must update systems to accommodate new nomination procedures, including eSign facilities.
* Action Required: Activate new accounts only upon receiving nomination forms, maintain client record confidentiality, ensure eSign functionality, and inform existing clients about the nomination requirements and deadlines.
Investors:
* Impact: Investors opening new accounts need to decide on nomination. Existing investors must provide a nomination choice by March 31, 2022, to avoid account freeze.
* Action Required: New investors must complete the nomination form or opt-out declaration. Existing investors must choose to nominate or opt-out by the deadline.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): The regulatory body for the securities market in India, responsible for protecting investors and regulating the market.
Companies Act, 2013: An Act of the Parliament of India that regulates incorporation of companies, responsibilities of a company, directors, dissolution of a company, and other related activities.
Stock Exchanges: Recognized entities that provide a platform for trading securities.
Depositories: Organizations that hold securities in electronic form.
Trading Members: Members of the Stock Exchanges.
Depository Participants: Agents of the Depositories.
Securities and Exchange Board of India Act, 1992: The Act under which SEBI was established and derives its powers.
SEBI Stock Broker Regulations, 1992: Regulations pertaining to stock brokers as defined by SEBI.
CIRCULAR
SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 July 23, 2021
To
All Recognized Stock Exchanges
All Recognized Depositories
Stock Brokers (Trading Members) through Recognized Stock Exchanges
Depository Participants through Depositories
Sir / Madam,
Nomination for Eligible Trading and Demat Accounts
1. Section 72 of Companies Act, 2013 provides for nomination by a holder of securities.
2. Investors opening new trading and or demat account(s) on or after October 01, 2021,
shall have the choice of providing nomination or opting out nomination, as follows;
a. The format for nomination form is given in Annexure - A to this circular
b. Opt out of nomination through ‘Declaration Form’, as provided in Annexure -
B to this circular
These forms at Annexure – A or B, would also be applicable for any subsequent
change / withdrawal of nomination.
3. In this regard, Trading Members and Depository Participants (hereinafter,
intermediaries), shall activate new Trading and Demat accounts from October 01,
2021, only upon receipt of above formats.
4. The nomination and Declaration form shall be signed under wet signature of the
account holder(s) and witness shall not be required. However, if the account
holder(s) affixes thumb impression (instead of wet signature), then witness signature
shall be required in the forms.
5. The on-line nomination and Declaration form may also be signed using e-Sign facility
and in that case witness will not be required.
6. Intermediaries shall ensure that adequate systems are in place including for
providing for eSign facility and also take all necessary steps to maintain
confidentiality and safety of client records.7. Further, all existing eligible trading and demat account holders shall provide choice
of nomination as per the option given in paragraph 2 above, on or before March 31,
2022, failing which the trading accounts shall be frozen for trading and demat
account shall be frozen for debits.
8. The Stock Exchanges, Depositories and intermediaries are directed to:
a. take necessary steps to implement the provisions of this circular, including
making necessary amendment to the relevant bye-laws / business rules /
regulations / operational instructions, as the case may be
b. bring the provisions of this circular to the notice of their respective constituents
and also disseminate this circular on their websites
c. communicate to SEBI, the status of the implementation of the provisions of
this circular in Monthly Development Report of the following month; and
d. monitor the compliance of this circular
9. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, read with the provisions of SEBI
(Stock Broker) Regulations, 1992 and SEBI (Depositories and Participants)
Regulations, 2018, to protect the interests of investors in securities and to promote
the development of, and to regulate the securities markets.
10. This circular is available on SEBI website at www.sebi.gov.in.
Yours faithfully,
Deepak Trivedi
Chief General Manager
Tel. no: 022-26449753
Email id: dtrivedi@sebi.gov.inNomination Form
[Annexure A to SEBI circular No. SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated July
23, 2021 on Mandatory Nomination for Eligible Trading and Demat Accounts]
TM / DP FORM FOR NOMINATION
Name and Address (To be filled in by individual applying singly or jointly)
Date D D M M Y Y Y Y UCC/ DP ID I N Client ID
I/We wish to make a nomination. [As per details given below]
Nomination Details
I/We wish to make a nomination and do hereby nominate the following person(s) who shall receive all the assets held in my / our account in the event
of my / our death.
Nomination can be made upto three Details of 1st Nominee Details of 2nd Nominee Details of 3rd Nominee
nominees in the account.
1 Name of the nominee(s) (Mr./Ms.)
2 Share of Equally % % %
each
Nominee [If not equally,
please specify
percentage] Any odd lot after division shall be transferred to the first nominee mentioned in the form.
3 Relationship With the Applicant
( If Any)
4 Address of Nominee(s)
City / Place:
State & Country:
PIN Code
5 Mobile / Telephone No. of
nominee(s)
6 Email ID of nominee(s)
7 Nominee Identification details –
[Please tick any one of following
and provide details of same]
󠄀 Photograph & Signature 󠄀󠄀 PAN
󠄀 Aadhaar 󠄀󠄀 Saving Bank
account no. 󠄀 󠄀󠄀 Proof of Identity 󠄀󠄀
Demat Account ID
Sr. Nos. 8-14 should be filled only if nominee(s) is a minor:
8 Date of Birth {in case of minor
nominee(s)}
9 Name of Guardian (Mr./Ms.) {in
case of minor nominee(s) }
10 Address of Guardian(s)City / Place:
State & Country:
PIN Code
11 Mobile / Telephone no. of
Guardian
12 Email ID of Guardian
13 Relationship of Guardian with
nominee
14 Guardian Identification details –
[Please tick any one of following
and provide details of same]
󠄀 Photograph & Signature
󠄀 PAN 󠄀 󠄀󠄀 Aadhaar Saving Bank
account no. 󠄀󠄀 Proof of Identity󠄀 󠄀
󠄀 󠄀Demat Account ID
Name(s) of holder(s) Signature(s) of holder*
Sole / First Holder (Mr./Ms.)
Second Holder (Mr./Ms.)
Third Holder (Mr./Ms.)
* Signature of witness, along with name and address are required, if the account holder affixes thumb impression, instead of signature
Note:
This nomination shall supersede any prior nomination made by the account holder(s), if any.
The Trading Member / Depository Participant shall provide acknowledgement of the nomination form to the account holder(s)Declaration Form for opting out of nomination
[Annexure B to SEBI circular No. SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated July
23, 2021 on Mandatory Nomination for Eligible Trading and Demat Accounts]
To Date D D M M Y Y Y Y
Trading Member/Participant’s Name
Trading Member/Participant’s Address
UCC/DP ID I N
Client ID (only for Demat account)
Sole/First Holder Name
Second Holder Name
Third Holder Name
I / We hereby confirm that I / We do not wish to appoint any nominee(s) in my / our trading / demat
account and understand the issues involved in non-appointment of nominee(s) and further are aware
that in case of death of all the account holder(s), my / our legal heirs would need to submit all the
requisite documents / information for claiming of assets held in my / our trading / demat account,
which may also include documents issued by Court or other such competent authority, based on the
value of assets held in the trading / demat account.
Name and Signature of Holder(s)*
1.___________________________________2.__________________________________________3___________________________________
* Signature of witness, along with name and address are required, if the account holder affixes thumb impression, instead of
signature