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Optional Nomination for Jointly Held Mutual Fund Units

Securities Exchange Board of India (SEBI), the regulatory authority overseeing India's securities markets, has recently issued a circular aimed at streamlining the nomination process for beneficiaries of Mutual Fund investments.



Previously, all individual unit holders of Mutual Funds, whether holding units solely or jointly, were required to nominate or opt out of nomination by June 30, 2024. Failure to comply would result in the freezing of folios for debits, posing administrative challenges for investors.


To streamline compliance processes and reduce costs associated with nomination requirements, SEBI constituted a working group to review the existing regulatory framework for Mutual Funds. Based on the recommendations of this group and subsequent public consultations, SEBI has introduced amendments to the nomination requirements:

Key Provisions:

a. Optional Nomination for Jointly Held Mutual Fund Folios: The circular stipulates that the requirement of nomination specified under Clause 17.16 of the Master Circular for Mutual Funds shall be optional for jointly held Mutual Fund folios. This means that investors holding Mutual Fund units jointly will have the discretion to nominate or opt out of nomination as per their preference.

 

b. Unchanged Provisions: While the requirement of nomination is made optional for jointly held Mutual Fund folios, all other provisions related to nomination as provided in the SEBI Master Circular and subsequent circulars remain unchanged. Investors holding Mutual Fund units solely or other types of folios must adhere to the nomination requirements specified in these circulars.

 

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