New rule for mutual fund plans: Subscribers must give nomination details or opt-out details

view original post

Mutual fund investors who are keen on subscribing to units on or after 01 October 2022 will have to submit nomination details or the declaration for opting out of the nomination. The Securities and Exchange Board of India (SEBI), in a circular issued on June 15, 2022, had made it mandatory for subscribers to submit the nomination details or declaration to opt out of the nomination on or after August 1, 2022. 

In a fresh notification, the SEBI has extended the August 1 deadline to October 01, 2022. “The timeline for the submission has been extended to October 01, 2022,” SEBI said in its latest monthly bulletin for August 2022. 

Sebi made the change in the date based on the representation of the Association of Mutual Funds in India (AMFI). As per the circular, the Asset Management Company (AMC) will have to provide an option to the subscribers to submit either the nomination form or the declaration form for opting out of the nomination in physical format or online format as per the choice of the unit holders. 

The circular added that in the case of the details being submitted online, the AMCs have been permitted to validate the forms also through two-factor authentication. “One of the factors will be a one-time password sent to the unitholder on his/her email/phone number registered with the AMC,” it added. 

It is to be noted here that there are 43 mutual fund houses at present, which together manage assets worth nearly Rs 38 lakh crore. 

Other rules 

In another set of rules, Sebi has asked to remove the applicability of the definition of “associate” to sponsors that invest in various companies on behalf of the subscribers of insurance policies.  The regulator elaborated that the definition of associate shall not be applicable to such sponsors (companies), which invest in various companies on behalf of the subscribers of insurance policies or such other schemes. 

The rules were cleared last month and have become effective from September 3, the Sebi said in a notification. 

(With agency inputs) 

Related Posts