207 SEBIth At the Board of Directors meeting held on September 30, 2024, a number of changes were announced, including several changes that will impact investors. While constant efforts are being made to make the investment space more investor-friendly, this measure also aims in the same direction, introducing uniform standards in the nomination regime across the Indian securities markets. .
Not only death but also incapacitation
Candidates will also be given the power to act on behalf of incapacitated people, courtesy of the new amendments, but “certain risk-mitigating checks and balances will be in place”, although such checks and balances are not yet in place. Not confirmed. Previous rules allowed a nominee to take the place of an account holder only if the account holder died.
Co-owner becomes co-owner
In case of joint holders in case of demat accounts and MF folios, nomination remains optional and not mandatory as was the case earlier. SEBI has always maintained that the nominee is a trustee representing the legal heirs and not necessarily the ultimate owner.
The SEBI meeting added that in the event of the death of one of the co-holders, the survivorship rule would apply and the rights to the asset would pass to the surviving co-holders. Previous norms only allowed this if a survivor or someone was mentioned, but the current arrangement means that the nominee will not play a role until all joint holders have died. It may be noted that SEBI had earlier made it mandatory for candidates to either stand or opt out.
Focus on KYC documents
Although there is some freedom in the list of documents that can be obtained to verify a candidate’s identity, and in some cases photographs and signatures were also considered, recent Board meetings have decided that the unique identification documents obtained are PAN, passport. , or Aadhaar. This is expected to strengthen the verification process and reduce the possibility of fraud.
How much is too much?
The maximum number of nominations for MF and demat accounts has been extended from 3 to 10. The real intention behind this adjustment is unknown. This is because introducing too many nominations can lead to implementation issues if the account owner dies. Cooperation with all candidates is of utmost importance for all future transactions such as transfers, submissions, monetization, etc. The process may be further complicated if the candidate himself dies before the death of the account holder.
Other norms
Other norms introduced and reiterated at Board meetings include: If pledged in advance, creditor claims take precedence over the transfer of assets to the nominee. If a candidate dies, his legal heirs are not entitled to any rights. There is no limit to the number of times a candidate can be changed. The option to designate a guardian for minor candidates will also be available.
