Complete These Tasks Before September! SEBI Is Set to Change Rules for Mutual Fund and Demat Nominations..

If you hold a Demat account or have investments in mutual funds, there is a crucial task you must complete before September 2026. The Securities and Exchange Board of India (SEBI) has introduced several significant changes to the rules regarding nominations, which will come into effect on September 1, 2026. The objective of these changes is to streamline the transfer of investments following an investor's demise and to reduce the volume of unclaimed financial assets. These new regulations are designed to make the investment process simpler and more digitally friendly.

According to SEBI's new regulations, any investor opening a new single-holder Demat account or mutual fund folio on or after September 1, 2026, will be required to provide details regarding a nominee. If an investor chooses not to designate a nominee, they must formally opt out of the nomination process by filling out a prescribed declaration form. However, for joint accounts and folios, the nomination facility will remain optional.

**Up to Three Nominees Can Be Added to a Single Account**
Investors will now be able to designate a maximum of three nominees for a single Demat account or mutual fund folio. In cases where there is more than one nominee, they may either continue to hold the investment jointly following the investor's death or open separate accounts to hold their respective shares. To simplify the nomination process, SEBI has made both online and offline options available. For online nominations, investors may utilize a Digital Signature Certificate (DSC), Aadhaar-based e-Sign, other valid electronic signatures, or OTP-based Two-Factor Authentication (2FA). Conversely, for offline nominations, a standard signature will suffice. A witness will not be required; however, in cases where a thumb impression is used, two witnesses will be mandatory.

**Reduced Information Requirements in Nomination Forms**
Under the new rules, the only mandatory information required will be the nominee's name, their relationship to the investor, and—in the case of a minor nominee—their date of birth. Details such as mobile numbers, email IDs, KYC details, and percentage of shareholding will remain optional. If the percentage of shareholding is not specified, the investment will be distributed equally among all nominees.

**No Restrictions on Changing Nominees**
SEBI has clarified that investors will retain the right to add, change, or remove a nominee at any time, as per their requirements. Whenever a change is made to the nomination, the concerned entities must issue an acknowledgment receipt for the same. Investors who have not yet filed a nomination, or who have chosen to opt out, will be apprised of the benefits of nomination twice a year via SMS and email. Additionally, reminder pop-ups will be displayed during the login process.

**Why is Nomination Important?**
Nomination simplifies the process of transferring an investment to the investor's family or legal heirs following their demise. In the absence of a nomination, the family may be compelled to navigate through lengthy legal and documentary procedures. SEBI believes that these new rules will help protect investors and their families from potential difficulties in the future. Furthermore, this initiative is expected to play a significant role in reducing the volume of unclaimed investments that remain dormant for extended periods.

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