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New mutual fund nomination rules for existing and new investors Know options and process


Mutual fund investors need to be aware of the new nomination rules. The SEBI’s new mutual fund nomination rules require investors to either provide a nomination in the prescribed format or opt-out of nomination through a signed declaration form. All existing mutual fund investors may expect the AMCs to get in touch shortly to either fill the nomination or fill the opt-out nomination form.

The new mutual fund nomination rules will apply even to existing unitholders.

The new investors will have to adhere to the new nomination rules on or after August 1, 2022, while existing mutual fund investors will have to comply with the rules by March 31, 2023.

As per the new rules, investors subscribing to mutual fund units on or after August 1, 2022, will have the choice of:

a. Providing nomination in the format as specified by SEBI (or)

b. Opting out of nomination through a signed Declaration form as specified by SEBI.

The nomination can be made only by individuals holding units on their own behalf singly or jointly. If the units are held jointly, all joint holders will sign the nomination form. A minor can be nominated and in that event, the name and address of the guardian of the minor nominee will have to be provided by the unitholder.

The ‘opt-out’ from nominating features is something that is new for the investors. All the AMCs have been asked to set a deadline as March 31, 2023, for nomination or opting out of a nomination for all the existing individual unit holders holding mutual fund units either solely or jointly, failing which the folios will be frozen for debits.

AMC will have to provide an option to the unit holders to submit either the nomination form or the declaration form for opting out of the nomination physically or online as per the choice of the unit holders.

In the case of a physical option, the forms shall carry the wet signature of all the unit holders and in case of online option, the forms shall be using an e-Sign facility, instead of the wet signatures of all the unit holders.

Source : Financial Express

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