SEBI Revises Nomination Rules for Demat Accounts and Mutual Funds

SEBI has eased the nomination framework for demat accounts and mutual fund folios by introducing modified norms aimed at simplifying investor onboarding and reducing the generation of unclaimed assets. Through a circular dated May 29, 2026, SEBI revised the nomination requirements after receiving representations from stakeholders regarding operational difficulties in implementing the earlier framework issued in January 2025.

Under the revised framework, nomination will be mandatory for all single-holder demat accounts and mutual fund folios opened on or after September 1, 2026, unless the investor expressly opts out by submitting a prescribed declaration. However, nomination will remain optional for jointly held accounts and folios.

Investors will now be permitted to nominate up to three persons. In the event of the investor’s demise, nominees may either continue in the same account or folio or open separate accounts for their respective holdings. “For all single accounts / folios opened on or after the date of implementation of this Circular, the investor shall mandatorily provide nomination, unless declaration form for ‘opt-out’ is submitted.”

SEBI has also simplified the nomination process by allowing investors to submit nominations either online or offline. Online nominations can be authenticated through digital signature, Aadhaar-based e-sign, other legally recognised e-sign facilities, or two-factor authentication involving OTP verification. For physical nominations, witness signatures will no longer be required where the investor signs normally. Witness details will be necessary only where a thumb impression is affixed.

The regulator has reduced the information required from investors. Only the nominee’s name and relationship with the investor will be mandatory, while details such as contact information, percentage share, KYC identifiers and guardian details for minor nominees will remain optional.

SEBI further clarified that where percentage shares among multiple nominees are not specified, the holdings will be distributed equally among them. “Where the percentage share of each nominee is not specified, the assets in the account / folio shall be apportioned among the nominees equally.”

The circular also permits investors to add, modify or cancel nominations any number of times. Depository Participants and Mutual Fund RTAs will be required to provide acknowledgements for every nomination or subsequent change.

To encourage nomination, regulated entities must send periodic reminders through emails and SMS to investors who have not registered nominees and display pop-up messages highlighting the benefits of nomination on digital platforms.

The revised framework will come into effect from September 1, 2026, and supersedes all earlier SEBI circulars relating to nomination in demat accounts and mutual fund folios.

To Read Full Circular, Download PDF Given Below.