This Securities and Exchange Board of India (SEBI) circular, reference number SEBI/HO/IMD/IMD-I/ DOFI/CIR/2022/105, dated July 29, 2022, addresses the nomination process for mutual fund unit holders. It modifies the implementation timeline specified in Circular No. SEBI/HO/IMD/IMD-II/ DOF3/CIR/2022/82 dated June 15, 2022.
Specifically, the circular extends the date from which the nomination requirement applies to new mutual fund unit subscribers. Investors subscribing to mutual fund units on or after October 1, 2022, will now be subject to the nomination requirements, which include the option to submit nomination details or a declaration opting out of nomination.
The circular also clarifies the submission process. Asset Management Companies (AMCs) must provide unit holders with the option to submit the nomination or opt-out declaration forms either physically (with wet signatures) or online. For online submissions, AMCs must validate the forms using either an eSign facility recognized under the Information Technology Act, 2000, or through two-factor authentication (2FA), with one factor being a One-Time Password (OTP) sent to the unit holder's registered email address or phone number.
This circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996, to protect investors' interests and regulate the securities market.
The circular is available on the SEBI website at www.sebi.gov.in. For further information, contact Manaswini Mahapatra, General Manager, at Tel no.: 022-26449375 or via email at manaswinim@sebi.gov.in.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body issuing the circular.
Mutual Funds (MFs): Entities regulated by the circular regarding nomination.
Asset Management Companies (AMCs): Companies managing mutual funds, addressed in the circular.
Association of Mutual Funds in India (AMFI): Industry association that provided representation leading to changes in the circular.
SEBI Circular No SEBIHOIMDIMDII DOF3PCIR202282 dated June 15, 2022: Previous circular being amended by this notification.
Information Technology Act, 2000: Law under which eSign facility is recognized.
Securities and Exchange Board of India Act, 1992: Act that empowers SEBI to issue circulars.
SEBI Mutual Funds Regulations, 1996: Regulations under which the circular is issued.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/105 July 29, 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 – Extension of timelines
1. SEBI vide Circular No SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 dated June
15, 2022 (Circular) mandated submission of nomination details/declaration for
opting out of nomination for investors subscribing to mutual fund units on or
after August 1, 2022.
2. In this regard, based on the representation received from AMFI, it has been
decided that:
a. Para 1 of the Circular will be read as “Investors subscribing to mutual fund
units on or after October 1, 2022, shall have the choice of:”.
b. Para 2 of the Circular will be read as “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). In case of online option, instead of wet
signature(s) of all the unit holder(s), AMCs shall validate the forms:
i. using e-Sign facility recognized under Information Technology Act,
2000; or
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Securities and Exchange Board of India
ii. through two factor authentication (2FA) in which one of the factor shall
be a One-Time Password sent to the unit holder at his/her email/
phone number registered with the AMC”.
3. 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.
4. This circular is available on SEBI website at www.sebi.gov.in.
Yours faithfully,
Manaswini Mahapatra
General Manager
Tel no.: 022-26449375
Email: manaswinim@sebi.gov.in
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