SEBI Proposes Simpler Nomination Rules for Demat and Mutual Fund Accounts; Public Feedback Open Till April 7

India’s market regulator, the Securities and Exchange Board of India (SEBI), has introduced a fresh proposal aimed at simplifying nomination rules for demat accounts and mutual fund folios. Announced on March 17, 2026, the proposal seeks to make the nomination process more user-friendly while improving clarity around asset distribution and investor rights.

SEBI has invited public comments on the proposal, and stakeholders can share their feedback until April 7, 2026. If implemented, the revised framework could significantly streamline how investors assign nominees and manage their financial assets.

Key Highlight: Simpler Nomination Process

One of the most notable changes in the proposal is the simplification of nominee details. Under the new framework, investors would only need to provide:

• Nominee’s name

• Relationship with the investor

Other details such as address, contact information, and percentage share would become optional. This move is expected to reduce paperwork and make the process quicker and more accessible, especially for first-time investors.

Equal Distribution If Shares Not Specified

SEBI has proposed a clear rule for cases where investors do not specify the share of each nominee. In such situations, the assets will be distributed equally among all nominees.

This provision aims to eliminate confusion and disputes during asset transfer, ensuring a fair and transparent allocation process.

Nomination to Become Default for Single Holder Accounts

To address the issue of unclaimed assets, SEBI has suggested making nomination a default option for all new single-holder accounts.

Investors who do not wish to appoint a nominee will need to submit a formal declaration, which can be done digitally. This replaces the earlier, more complex processes and ensures better compliance.

Changes for Joint Accounts

For joint accounts, nomination will remain optional, giving account holders the flexibility to decide based on their preferences.

Additionally, SEBI has proposed removing the video-based declaration option for opting out of nomination. Instead, a simpler online declaration system will be introduced.

No Operational Rights for Nominees

The regulator has clearly stated that nominees will not have the authority to operate the account while the investor is alive.

Moreover, an earlier provision that allowed nominees to operate accounts if the investor became incapacitated is set to be removed. In such cases, investors will need to rely on existing legal mechanisms like Power of Attorney (PoA).

Limit on Number of Nominees Reduced

Under the proposed rules, investors will be allowed to appoint a maximum of four nominees, down from the earlier limit of ten.

This change aligns nomination practices more closely with banking norms and is expected to simplify record-keeping and execution.

Role of Nominee After Investor’s Death

SEBI has clarified that nominees will act as trustees or custodians of the assets after the investor’s death. They will transfer the holdings to the legal heirs, rather than becoming the ultimate owners themselves.

This distinction is crucial in ensuring that legal inheritance laws are followed, reducing potential disputes among family members.

Tackling Unclaimed Assets

To address the growing concern of unclaimed investments, SEBI has proposed that intermediaries such as brokers and fund houses must send regular reminders to investors who have not added a nominee.

These reminders may be sent through:

• SMS alerts

• Emails

• Platform notifications

The goal is to encourage investors to complete their nomination details and avoid complications in the future.

Why These Changes Matter

SEBI’s proposed reforms are designed to make financial account management more transparent, efficient, and investor-friendly. By simplifying procedures and clarifying rules, the regulator aims to:

• Reduce unclaimed assets

• Minimize legal disputes

• Improve ease of investing

• Strengthen investor protection

What Investors Should Do Now

Investors should review the proposed changes and consider submitting their feedback before the April 7 deadline. Understanding these updates can also help them make better decisions regarding nomination in their demat and mutual fund accounts.

If approved, these new rules could bring meaningful improvements to how financial assets are managed and transferred in India’s investment ecosystem.