SEBI Simplifies Nomination Process for Demat Accounts and Mutual Fund Folios
SEBI has issued a new circular on 20.05.2026 revising the nomination framework for demat accounts and mutual fund folios. The changes aim to address implementation challenges under the earlier framework introduced in January 2025. The revisions intend to simplify investor onboarding and reduce the incidence of unclaimed securities and investments.
Key Changes:
A. Nomination Mandatory for Single Holder Accounts
- For single-holder demat accounts and mutual fund folios opened on or after 1 September 2026, nomination will be mandatory unless the investor expressly opts out through a prescribed declaration.
- For jointly held accounts/folios, nomination remains optional. Any nomination or change in nomination will require the consent of all joint holders, irrespective of the mode of operation.
B. Upto 3 Nominees permitted
- Investors may nominate upto 3 nominees.
- Upon the investor’s demise, nominees may continue holdings in the same account/folio or receive their respective shares through separate accounts/folios.
C. Simplified Nomination Process
- Nomination may be submitted online or offline.
- Online nominations can be authenticated through:
- Digital Signature Certificate (DSC);
- Aadhaar-based e-sign or other legally recognised e-sign facilities; or
- Two-factor authentication (2FA), including OTP verification on registered mobile number and email.
For physical submissions, witness signatures are no longer required where the investor signs normally. Witnesses are required only where a thumb impression is affixed.
D. Opt-Out Facility Retained:
Investors may continue to opt out of nomination either through a prescribed declaration form or an online opt-out mechanism.
E. Change or cancellation
Investors may add, modify, or cancel nominations at any time, without any restriction on the number of changes. The prescribed nomination and opt-out forms will also apply to subsequent changes, cancellations, and existing accounts/folios. Regulated entities must provide an acknowledgement for every nomination request or subsequent modification.
F. What operational changes are required from Regulated Entities?
- Periodic account or holding statements must disclose either the name(s) of nominee(s) or indicate whether nomination has been registered, based on the investor’s preference.
- For accounts and folios without nomination (including opt-outs), Depository Participants and Mutual Fund RTAs must:
- send bi-annual email and SMS reminders encouraging investors to register a nomination; and
- display nomination-related pop-up messages on web and mobile platforms at the investor’s first login of the day.
- Regulated entities must also update their systems and processes to facilitate compliance with the revised framework.
The revised framework will come into force on 1 September 2026 and will apply, to existing demat accounts and mutual fund folios as well.
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