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Team Studycafe | Jun 16, 2022 | Views 2

Nominations not compulsory in mutual funds anymore

Nominations not compulsory in mutual funds anymore

The Securities and Exchange Board of India (SEBI) vide Circular dated 15th June 2022 has made mutual fund unitholder nominations optional by offering investors the option of providing or opting out of nomination via a signed declaration form. This option will be available to investors who subscribe to mutual funds units on or after August 1, 2022.

All mutual fund houses have been urged by the regulator to establish a deadline of March 31, 2023, for nomination or opting out of candidacy for all existing individual unit holders owning mutual fund units solely or jointly. If you fail to do so, your folios will be frozen from debit.

As Per SEBI’s Circular:

The AMC shall offer the unit holder(s) with the option of submitting either the nomination form or the declaration form for opting out of the nomination in either physical or electronic form, depending on the unit holder’s preference (s). In the case of a physical option, the forms must have the wet signatures of all unit holders, and in the case of an online option, the forms must use the e-Sign capability authorized under the Information Technology Act, 2000, instead of wet signatures (s).

All AMCs must guarantee that suitable systems are in place to provide the e-Sign service, as well as take all required efforts to ensure that client records are kept secret and secure.

This circular is issued in the exercise of the powers conferred on the Securities and Exchange Board of India under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote, develop, and regulate the securities market.

Previously, a nomination facility was required to begin new investments.

For Official Circular Download PDF Given Below:

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