Executive Summary:
This SEBI circular, issued on June 15, 2022, addresses nomination rules for mutual fund unit holders to align practices across the securities market. Investors subscribing to mutual fund units from August 1, 2022, can either nominate or opt-out via a signed declaration. Existing individual unit holders must submit their nomination or opt-out declaration by March 31, 2023, or their folios will be frozen for debits.
Key Points / Main Content:
Nomination Options for New Investors:
* Investors subscribing to mutual fund units on or after August 1, 2022, must either provide a nomination or opt-out through a signed declaration form (Annexure A).
Submission Methods:
* AMCs must provide options for submitting nomination or opt-out declarations physically (wet signature) or online (eSign facility under Information Technology Act, 2000).
AMC Responsibilities:
* AMCs must implement systems for eSign facilities and maintain client record confidentiality and safety.
Deadline for Existing Unit Holders:
* Existing individual unit holders must submit nomination or opt-out declarations by March 31, 2023; otherwise, their folios will be frozen for debits.
Legal Basis:
* This circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 77 of SEBI Mutual Funds Regulations, 1996.
Impact Analysis:
Mutual Funds (MFs) / Asset Management Companies (AMCs):
* Impact: AMCs need to implement systems for providing eSign facilities and ensure data confidentiality. AMCs must also inform existing unit holders about the nomination/opt-out requirement and the March 31, 2023, deadline.
* Action Required: Establish eSign infrastructure, update systems, and communicate the new policy and deadline to existing unit holders.
Mutual Fund Unit Holders (New):
* Impact: Investors subscribing on or after August 1, 2022, will need to decide whether to nominate or opt-out.
* Action Required: Choose to either nominate or opt-out via a signed declaration form at the time of subscription.
Mutual Fund Unit Holders (Existing):
* Impact: Existing individual unit holders need to take action regarding nomination.
* Action Required: Submit a nomination or opt-out declaration by March 31, 2023, to avoid folio freeze.
Registrar and Transfer Agents (RTAs):
* Impact: RTAs will likely need to update processing systems.
* Action Required: Modify systems to accommodate the new nomination/opt-out options and the handling of frozen folios.
Key Entities Referenced
Association of Mutual Funds in India: Industry body for mutual funds in India.
Securities and Exchange Board of India: Regulatory body for securities market in India, issuing the circular.
Mutual Funds: Entities regulated by the circular, specifically concerning unit holder nominations.
Asset Management Companies: Companies managing the Mutual Funds and responsible for implementing the circular's directives.
SEBI Mutual Funds Regulations, 1996: Regulations under which the nomination format is specified and powers are conferred for issuing the circular.
Information Technology Act, 2000: Law under which e-Sign facility is recognized, allowing for online nomination/opt-out processes.
August 1, 2022: Date from which new mutual fund unit subscribers must be given the choice of nomination or opting out.
March 31, 2023: Deadline for existing individual unit holders to submit nomination or opt-out, failing which folios will be frozen.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 June 15, 2022
To
All Mutual Funds (MFs)/
Asset Management Companies (AMCs)/
Trustee Companies/ Board of Trustees of Mutual Funds/
Registrar and Transfer Agents (RTAs)/
Association of Mutual Funds in India (AMFI)
Sir / Madam,
Subject: Nomination for Mutual Fund Unit Holders
In order to bring uniformity in practices across all constituents in securities market,
the following is decided in case of nomination for eligible Mutual Fund Unit
Holders:
1. Investors subscribing to mutual fund units on or after August 1, 2022, shall
have the choice of:
a. Providing nomination in the format specified in fourth schedule of SEBI
(Mutual Funds) Regulations, 1996 (or)
b. Opting out of nomination through a signed Declaration form as provided in
Annexure - A to this circular.
2. AMC shall provide an option to the unit holder(s) to submit either the
nomination form or the declaration form for opting out of nomination in physical
or online as per the choice of the unit holder(s). In case of physical option, the
forms shall carry the wet signature of all the unit holder(s) and in case of online
option, the forms shall be using e-Sign facility recognized under Information
Technology Act, 2000, instead of wet signature(s) of all the unit holder(s).
3. All AMCs shall ensure that adequate systems are in place for providing the e-
Sign facility and take all necessary steps to maintain confidentiality and safety
of client records.
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Securities and Exchange Board of India
4. All the AMCs are advised to set deadline as March 31, 2023 for nomination /
opting out of nomination for all the existing individual unit holder(s) holding
mutual fund units either solely or jointly as mentioned at para 1 above, failing
which the folios shall be frozen for debits.
5. This circular is issued in exercise of the powers conferred under Section 11 (1)
of the Securities and Exchange Board of India Act, 1992, read with the
provision of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996 to protect
the interests of investors in securities and to promote the development of, and
to regulate the securities market.
6. This circular is available on SEBI website at www.sebi.gov.in.
Yours faithfully,
Bithin Mahanta
General Manager
Tel no.: 022-26449634
Email: bithinm@sebi.gov.in
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Securities and Exchange Board of India
Declaration Form for opting out of nomination
[Annexure A to SEBI circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 dated
June 15, 2022 on Nomination for Eligible Mutual Fund Unit Holder(s)]
To Date D D M M Y Y Y Y
Mutual Fund / AMC’s Name
Mutual Fund / AMC’s Address
Mutual Fund Folio Number
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) for my mutual
fund units held in my / our mutual fund folio 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 issued by
Court or other such competent authority, based on the value of assets held in the mutual
fund folio.
Name and Signature of Unitholder(s)
Unitholder (1) Signature: _______________________ Name: _______________________
Unitholder (2) Signature: _______________________ Name: _______________________
Unitholder (3) Signature: _______________________ Name: _______________________
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