Introduction
SEBI, on December 27, 2023, extended the deadline for investors to nominate their demat accounts and mutual fund folios to June 30, 2024, to avoid account freezing. However, in a circular dated June 10, 2024, SEBI introduced significant decisions affecting existing and new investors, including the elimination of account freezes due to non-nomination and ensuring timely payments from listed companies/RTAs.
SEBI's Key Decisions for Existing Investors/Unitholders
1. Non-freezing of Demat and Mutual Fund Accounts
SEBI clarified that demat and mutual fund accounts would not be frozen due to the absence of nomination choices, ensuring uninterrupted account access for all investors.
2. Grievance Lodging and Payment Receipt without Nominations
SEBI allowed security holders to lodge grievances and receive payments without submitting nomination choices, preventing delays in accessing services and payments.
3. Prohibition of Withholding Payments
Listed companies/RTAs are prohibited from withholding pending payments of security holders due to lacking nominations, ensuring timely disbursement to investors.
Mandatory Nomination Choices for New Investors
SEBI mandated new investors to provide nomination choices for demat accounts and MF folios, except for jointly held accounts, aiming for clear beneficiary designation.
Encouraging Nomination Choices for Smooth Securities Transmission
SEBI encourages existing investors to provide nomination details to facilitate smooth securities transmission, reducing the accumulation of unclaimed assets.
Email Reminders and Pop-up Facilities for Nomination Updates
Depository Participants (DPs) and Asset Management Companies (AMCs) are required to send email and SMS reminders for nomination updates. Additionally, pop-up reminders will be provided on web/mobile platforms for investors without nomination choices, effective from October 01, 2024.
Conclusion
SEBI's measures enhance flexibility and convenience for investors, eliminating the risk of account freezes, promoting continuous access to investments, ensuring proper beneficiary designation, enhancing investor confidence, and streamlining asset transmission in the securities market.
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