SEBI Extends Deadline for Submission of 'Choice of Nomination' Details to June 30, 2024

SEBI has extended the deadline for submitting ‘Choice of Nomination’ details to June 30, 2024.

On 10th June,2024, Securities  and Exchange Board of India (SEBI) released a circular to announce all stock market participants regarding its decision on non-submission of ‘ Choice of Nomination’ details.

• SEBI has extended the last date to 30th June, 2024 for submission of ‘ choice of nomination’ details for demat accounts and mutual fund folios after which the demat account or folios for debits will be frozen.

• Earlier, the Indian Stock Market Regulator ‘SEBI’ informed that 30th June, 2024 will be the last date to furnish ‘choice of Nomination’ details by  demat account holders / unit holders . Also, Non furnishing of ‘Choice of Nomination’ details will lead to freezing of accounts , after which the investor cannot withdraw payments. 

• As of 10th June,2024, SEBI has informed that the security holders who have not furnished detail of his PAN, choice of nomination, contact details, bank account details and specimen signature

• Investors will be able to register a grievance, complaint, or request any service from the RTA (Registrars to an Issue and Share Transfer Agents) only after updating the necessary details.

• The security holders who have not furnished PAN details, KYC details and Nomination  details will be able to receive physical mode of payment of dividends , interest payment or redemption effective from 1st April,2024. 

• But the security holder can receive electronic mode of payment only after furnishing ‘Choice of Nomination’ details 

• SEBI has directed Depository Participants (DPs), Asset Management Companies (AMCs), and Registrars to an Issue and Share Transfer Agents (RTAs) to send bi-weekly reminders via email and SMS to demat account holders and unit holders, urging them to update their 'Choice of Nomination' details.

• SEBI has also released formats for furnishing ‘ Choice of Nomination’ details for demat accounts and mutual fund folios in Annexure – A (for providing details) and in Annexure -B (declaration for nomination).

For Existing Investors/ Unit Holders

• SEBI has decided that the existing investors/ unit holders Demat account will not be frozen if the investor/ unit holder does not submit the ‘ choice of nomination’ details.

• The existing investors/ unit holders who holds securities in physical form can receive payments even with non 

• For existing investors, when logged into web/ mobile application/ platform for demat account/ mutual fund folios, the DP / AMC’s and RTAs should provide a pop-up notification to furnish ‘ choice of nomination’ details. This provision should be applicable from 1st October,2024.

For New Investors/ Unit Holders

• In case of new investors/ unit holders , should mandatorily furnish ‘choice of nomination’ details for demat accounts / mutual funds folios.

• New investor/ unit holders who jointly hold demat accounts and mutual fund folios are exempted from mandatory furnishing of ‘choice of nomination’ details.

Importance of Furnishing ‘Nomination Details’

Appointing a nominee is very critical for a demat account / mutual fund folios.  Nominee details are essential for seamless transfer of account holders’ funds to their beneficiaries through nomination. When an investor fails to furnish nomination details, transfer of  funds to beneficiaries can be done only through legal means.  At times, due to these long legal formalities, account funds remain unclaimed.  All investors are advised to always update their nomination details to pass their funds to their beneficiaries when needed.

Conclusion

SEBI has extended the deadline for submitting ‘Choice of Nomination’ details to June 30, 2024. Earlier SEBI has informed the market participants to freeze accounts if nomination details are not submitted. As of 10th June, 2024, SEBI has announced that the existing accounts will remain active without this submission. However, from April 1, 2024, security holders must update their details to receive payments electronically and register grievances. Communications to update nomination details will be sent regularly. For new investors, submitting these details is mandatory unless they hold accounts jointly. This extension aims to ensure smoother compliance and uninterrupted access for all investors.

Frequently Asked Questions

What is the new deadline for submitting 'Choice of Nomination' details for demat accounts and mutual fund folios? 

The new deadline for submitting 'Choice of Nomination' details is June 30, 2024.

What will happen if I do not submit 'Choice of Nomination' details by the deadline? 

From June 30, 2024, demat accounts and mutual fund folios lacking 'Choice of Nomination' details will be frozen for debits, thus preventing withdrawals.

Will my existing demat account or mutual fund folio be frozen if I don’t submit the 'Choice of Nomination' details? 

No, SEBI has decided that existing demat accounts and mutual fund folios will not be frozen if the 'Choice of Nomination' details are not submitted.

Will I receive any notifications about updating my nomination details when I log into my account? 

Yes, from October 1, 2024, existing investors will receive pop-up notifications to furnish 'Choice of Nomination' details when they log into their web or mobile applications/platforms for demat accounts or mutual fund folios.

Where can I find the formats for submitting 'Choice of Nomination' details?

SEBI has released formats in Annexure A (for providing details) and Annexure B (declaration for nomination) for submitting 'Choice of Nomination' details.