Investors who are subscribing to mutual fund units from August 1 will have the choice of providing nomination or opting out nomination, capital markets regulator Sebi (Securities and Exchange Board of India) said on Wednesday.
Also, the regulator has issued a format for nomination form and opting out of nomination through a ‘declaration form’ in this regard, according to a circular.
Further, Asset Management Companies (AMCs) have been asked to set the deadline as March 31, 2023 for nomination or opting out of nomination for all the existing individual unit holder(s) holding mutual fund units either solely or jointly, failing which the folios will be frozen for debits.
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Under the new framework, AMC will have to 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 will carry the wet signature of all the unit holder(s) and in case of online option, the forms will be using e-sign facility instead of wet signature(s) of all the unit holder(s).
AMCs have been asked to ensure that adequate systems are in place for providing the e-sign facility and they need to take all necessary steps to maintain confidentiality and safety of client records.
The move is aimed at bringing uniformity in practices across all constituents in securities market.
Last year, Sebi gave a similar choice for investors who were opening new trading and demat account.