Executive Summary:
This SEBI circular extends the deadline for existing trading and demat account holders to submit their nomination details or opt-out declaration to September 30, 2023, from the previous deadline of March 31, 2023. It instructs Stock Brokers and Depository Participants to encourage clients to update their nomination choices. Stock Exchanges and Depositories must amend their bylaws and monitor the progress of nomination updates, submitting monthly reports to SEBI.
Key Points / Main Content:
Extension of Nomination Deadline:
* The deadline for mandatory submission of 'choice of nomination' for existing trading and demat accounts is extended to September 30, 2023.
* Accounts without updated nomination details will be frozen for trading and debits after this date.
Communication and Guidance:
* Stock Brokers and Depository Participants must send fortnightly communications (emails and SMS) to clients who have not yet updated their nomination choices.
* The communication should provide clear guidance on how clients can furnish or opt-out of nomination.
Maintenance of Existing Provisions:
* All other provisions mentioned in the original circular dated July 23, 2021, and the amendment circular dated February 24, 2022, remain unchanged.
Responsibilities of Stock Exchanges and Depositories:
* Amend relevant bylaws, rules, and regulations to implement this circular.
* Disseminate the provisions of this circular to their constituents and on their websites.
* Monitor efforts made by trading members and depository participants regarding the updation of choice of nomination by their clients.
* Submit monthly reports to SEBI on the progress of nomination updates within seven days of the end of each month, starting with a report by May 7, 2023, for April 2023.
Impact Analysis:
Stock Brokers and Depository Participants:
* Impact: Responsible for communicating the extended deadline and providing guidance to clients on updating their nomination choices. They must also monitor and report on the progress of these updates.
* Action Required: Send fortnightly communications to clients, provide clear guidance on nomination processes, and track and report on the progress of nomination updates.
Trading and Demat Account Holders:
* Impact: Benefit from the extended deadline to update their nomination details, avoiding potential freezing of their accounts.
* Action Required: Furnish nomination details or submit a declaration for opting out of nomination before September 30, 2023.
Stock Exchanges and Depositories:
* Impact: Required to implement the circular's provisions, amend their bylaws, and monitor the progress of nomination updates by their constituents.
* Action Required: Amend bylaws, disseminate information to constituents, monitor progress, and submit monthly reports to SEBI.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): Regulatory body for securities market in India, responsible for issuing the circular.
Stock Exchanges: Recognized entities for trading securities; required to implement and monitor the circular.
Depositories: Recognized entities that hold securities; required to implement and monitor the circular.
Trading Members: Members of Stock Exchanges involved in trading; responsible for client communication regarding nomination.
Depository Participants: Agents of Depositories involved in holding securities; responsible for client communication regarding nomination.
SEBI circular SEBIHOMIRSDRTAMBCIRP2021601 dated July 23, 2021: Original SEBI circular mandating nomination for trading and demat accounts.
SEBI circular SEBIHOMIRSDMIRSDRTAMBP CIR202223 dated February 24, 2022: SEBI circular extending the timeline for mandatory submission of 'choice of nomination'.
Securities and Exchange Board of India Act, 1992: The act that empowers SEBI to issue circulars and regulate the securities market.
CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/42 March 27, 2023
To
All Recognized Stock Exchanges
All Recognized Depositories
Stock Brokers (Trading Members) through Recognized Stock Exchanges
Depository Participants through Depositories
Dear Sir / Madam,
Subject: Nomination for Eligible Trading and Demat Accounts – Extension of
timelines for existing account holders
1. SEBI, vide circular no. SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated July 23,
2021 had mandated providing choice of nomination details, i.e., either furnishing
of nomination or declaration for opting out of nomination for investors opening
new trading and or demat account(s) on or after October 01, 2021 and for all
existing eligible trading and demat account holders latest by March 31, 2022
failing which the trading accounts shall be frozen for trading and demat account
shall be frozen for debits.
2. Thereafter, on the basis of representations received from various stakeholders,
vide SEBI circular SEBI/HO/MIRSD/MIRSD_RTAMB/P /CIR/2022/23 dated
February 24, 2022, the timeline for mandatory submission of 'choice of
nomination' for existing trading and demat accounts was extended to March 31,
2023.
3. Based on the assessment of the trading as well as demat accounts in which
choice of nomination details (i.e. furnishing of nomination or declaration for opting
out of nomination) has not been updated and on the basis of representations
received from the stakeholders, it has been decided that the provisions
mentioned at para 7 of SEBI circular dated July 23, 2021 read with para 3 (a) of
SEBI circular dated February 24, 2022 with regard to freezing of accounts shall
come into force with effect from September 30, 2023 instead of March 31, 2023.
4. Stock Brokers and Depository Participants shall encourage their clients to update
‘choice of nomination’ by sending a communication on fortnightly basis by way of
Page 1 of 2emails and SMS to all such UCCs/demat accounts wherein the ‘choice of
nomination’ is not captured. The communication shall provide guidance through
which the client can provide his/her ‘choice of nomination’.
5. All other provisions mentioned in the circulars SEBI/HO/MIRSD/RTAMB/CIR
/P/2021/601 dated July 23, 2021 and SEBI/HO/MIRSD/MIRSD_RTAMB/P
/CIR/2022/23 dated February 24, 2022 shall remain unchanged.
6. Stock Exchanges and Depositories are advised to:
make necessary amendments to the relevant bye-laws, rules and
regulations, operational instructions, as the case may be, for the
implementation of the above circular;
bring the provisions of this circular to the notice of their constituents and
also disseminate the same on the website;
monitor the efforts made by trading members and depository participants
for updation of ‘choice of nomination’ by their clients and submit a report
to this effect on monthly basis within next seven days from the end of the
month. The first such report shall be submitted by May 07, 2023 for the
month of April 2023.
7. This circular is issued in exercise of powers conferred by Section 11(1) of the
Securities and Exchange Board of India Act, 1992 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
8. This circular is available on SEBI website at www.sebi.gov.in under the
categories “Legal Framework -> Circulars”.
Yours faithfully,
Aradhana Verma
General Manager
Market Intermediaries Regulation and Supervision Department
Tel. No. 022-2644 9633
Email id - aradhanad@sebi.gov.in
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