SEBI Extends Deadline for Adding Nominees to Mutual Funds

Mumbai: Markets regulator Securities and Exchange Board of India (SEBI) has granted mutual fund account holders an extension until January 1, 2024, to nominate a beneficiary or opt out of nomination by submitting a declaration form. If investors fail to do so, their folios will be frozen.

This extension comes in response to representations from market participants, and it aims to assist investors in securing their assets for their legal heirs.

Previously, the deadline for existing mutual fund holders to make a nomination choice was set for September 30, 2023. However, SEBI has now postponed the implementation of folio freezing until January 1, 2024.

In addition to this extension, SEBI has instructed asset management companies (AMCs) and RTAs to actively encourage unit holders to comply with the nomination requirement. They are to send fortnightly communications via email and SMS to unit holders who have not yet fulfilled the nomination requirement.

This move by SEBI stems from its June 15, 2022, circular, which made it mandatory for mutual fund subscribers to submit their nomination details or opt out of nomination starting from August 1, 2022. The deadline for compliance has been extended multiple times to accommodate investors.

Experts in the market have noted that many mutual fund folios were opened without designating a beneficiary, which posed challenges for rightful heirs when trying to claim assets in the event of an account holder’s demise. This was due to various documentation requirements.

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