Key Takeaways
- New single-holder demat accounts and mutual fund folios must provide nomination or submit an opt-out declaration.
- Jointly held accounts and folios are treated differently.
- Investors can appoint up to three nominees.
- All joint holders must consent to providing or changing nomination details.
- Nomination can generally be completed online or offline.
- A nominee helps with transmission after death but does not automatically eliminate succession-related disputes.
What Are the New SEBI Nominee Rules?
SEBI has modified the nomination process for demat accounts and mutual fund folios.
The purpose is to make it easier for investors to transfer investments to their chosen nominees and reduce the number of unclaimed financial assets.
- Under the revised framework, a single-holder demat account or mutual fund folio generally requires either:
- Nomination details, or
- A formal declaration choosing not to nominate
This rule applies to the nomination process for demat accounts and mutual fund folios handled by regulated entities.
Who Can Appoint a Nominee?
Nomination is generally available to individual investors holding investments in their own name.
- Eligible investors may nominate a person such as:
- Spouse
- Child
- Parent
- Brother or sister
- Other family member
- Trusted individual
- Minor through a guardian
Investors should enter the nominee’s details carefully and keep them updated after major life events.
How Many Nominees Can You Add?
Investors can appoint up to three nominees for a demat account or mutual fund folio.
If multiple nominees are appointed, the investor can specify the percentage share for each nominee.
The total allocation should add up to 100%.
- For example:
- Nominee 1: 50%
- Nominee 2: 30%
- Nominee 3: 20%
Avoid entering percentages that do not add up correctly.
Is Nomination Mandatory?
- For new single-holder accounts and folios, investors generally need to either:
- Provide nominee details, or
- Submit a formal opt-out declaration
This means you should not leave the nomination section blank.
If you do not wish to appoint a nominee, select the official opt-out option provided by your broker, depository participant, mutual fund house or registrar.
Are Nominees Required for Joint Accounts?
Nomination is optional for jointly held demat accounts and mutual fund folios.
However, if the joint holders decide to add or change a nominee, the consent of all joint holders is required.
This applies regardless of how the account is operated.
For example, even if an account operates on an “Either or Survivor” basis, the nominee-related request may still require the necessary consent under the applicable process.
How Can You Add a Nominee Online?
The online process may vary between brokers, depositories and mutual fund platforms.
- Generally, the process involves:
- Log in to your investment account.
- Open the profile or account-settings section.
- Select “Nomination” or “Add Nominee”.
- Enter the nominee’s details.
- Add the nominee’s relationship and percentage share.
- Provide guardian details if the nominee is a minor.
- Complete OTP, e-sign or other verification.
- Save the confirmation.
Keep a screenshot or acknowledgement after completing the process.
Can Nomination Be Completed Offline?
Yes. Regulated entities may also provide an offline nomination form.
- You may need to submit:
- Nominee’s full name
- Date of birth
- Address
- Relationship
- Mobile number
- Email address
- Identity details
- Percentage share
- Guardian details for a minor nominee
- Investor signatures
For jointly held accounts, all required holders should sign according to the applicable account instructions.
What Happens If You Do Not Want a Nominee?
You may choose to opt out of nomination where the process allows it.
However, opting out can make the transmission process more complicated after the investor’s death.
- Legal heirs may need to provide additional documents, such as:
- Death certificate
- Legal-heir proof
- Succession certificate
- Probate documents
- Indemnity bond
- Affidavit
- No-objection certificate
The exact documents depend on the account type, asset value and applicable legal process.
Nominee vs Legal Heir
A nominee is the person recorded by the financial institution to receive or manage the transmission process after the investor’s death.
A legal heir is a person entitled to inherit assets under applicable succession law or a valid Will.
Nomination helps simplify the transfer process, but it should not be treated as a complete substitute for estate planning.
- For larger investments, investors should also consider:
- Preparing a valid Will
- Keeping investment details organised
- Informing family members
- Updating nominees after marriage or divorce
- Reviewing nomination after the birth of a child
- Keeping copies of account statements
What Happens If a Nominee Dies Before the Investor?
If a nominee dies before the investor, the nomination details may need to be updated.
The investor should remove the deceased nominee and add a new nominee where appropriate.
- Do not wait until a claim arises. Review nomination details after:
- Death of a nominee
- Marriage
- Divorce
- Birth or adoption of a child
- Change in family responsibilities
- Change in financial priorities
What If the Nominee Is a Minor?
A minor can generally be appointed as a nominee, but guardian details may be required.
The guardian may act on behalf of the minor until the minor reaches the applicable legal age.
Enter the guardian’s name and details accurately. A mistake can create delays during transmission.
What Information Should Investors Check?
- Investors should verify:
- Spelling of nominee’s name
- Date of birth
- Relationship
- Address
- Mobile number
- Email address
- Percentage allocation
- Guardian details
- PAN or other identity information where requested
Even a small mismatch can delay account transmission.
What Existing Investors Should Do
The revised framework does not mean that every existing investor must close an account.
- However, existing investors should log in to their broker, demat account, mutual fund account or registrar portal and check:
- Whether a nominee is already registered
- Whether the nominee details are correct
- Whether the opt-out status is recorded
- Whether multiple nominees are listed correctly
- Whether the percentage allocation totals 100%
If details are missing, update them using the official online or offline process.
Common Mistakes to Avoid
Leaving the Nomination Section Blank
If you do not want to nominate anyone, submit the formal opt-out declaration instead of leaving the section empty.
Adding Incorrect Percentages
The percentage share of all nominees should total 100%.
Ignoring Joint-Holder Consent
All joint holders may need to consent to providing or changing nomination details.
Treating Nomination as a Will
Nomination helps financial institutions process transmission but may not resolve all legal inheritance issues.
Forgetting to Update Nominees
Old nominee details can create problems after marriage, divorce or changes in family responsibilities.
Not Saving the Acknowledgement
Always save the confirmation email, reference number or downloaded form.
Frequently Asked Questions
Conclusion
The revised SEBI nominee rules make it easier for investors to organise their demat accounts and mutual fund folios.
Single holders generally need to provide nominee details or submit an official opt-out declaration. Joint holders have different rules, and all joint holders may need to approve changes.
Investors should review their nomination details regularly and keep them consistent with their Will and broader financial plan. Adding a nominee takes only a few minutes, but it can save family members significant paperwork and delay in the future.