The regulator has clarified that investors can nominate up to three individuals for a demat account or mutual fund folio.
SEBI added that if the percentage allocation among nominees is not specified, assets will be divided equally by default.
In a circular issued on May 29, 2026, SEBI revised several operational norms related to nominations after receiving feedback and implementation concerns from market participants. The new rules will come into effect from September 1, 2026.
Nomination mandatory for single holders
Under the revised framework, investors opening single-holder demat accounts or mutual fund folios after the implementation date will have to either provide nominee details or explicitly opt out of nomination through a declaration form.
SEBI said this move is intended to make the transmission of investments smoother after the death of an investor and help avoid unclaimed assets.
However, nomination will remain optional for jointly held accounts and folios.
Up to three nominees allowed
The regulator has clarified that investors can nominate up to three individuals for a demat account or mutual fund folio.
In cases involving multiple nominees, each nominee may either continue holding investments jointly in the same folio or choose to open separate accounts for their respective shares after the investor’s demise.
Online and offline nomination both allowed
SEBI has allowed investors to submit nomination requests through both online and offline methods.
For online nominations, validation can be done through a Digital Signature Certificate (DSC)
- Aadhaar-based e-sign
- Other legally recognized e-sign methods
- Two-factor authentication (2FA) with OTP verification on the registered mobile number and email address.
For physical or offline nominations, a normal signature will be sufficient, and witness signatures will not be required. However, if the investor uses a thumb impression instead of a signature, two witnesses will be needed.
What information will be mandatory?
According to the circular, only limited details will be compulsory in the nomination form:
- Name of nominee
- Relationship of the nominee with the investor
- Date of birth of the nominee if the nominee is a minor.
- Other details such as mobile number, email ID, KYC information, and percentage share allocation among nominees will remain optional.
SEBI added that if the percentage allocation among nominees is not specified, assets will be divided equally by default.
Investors can change nominees unlimited times
The market regulator has also clarified that investors can add, modify or cancel nomination details any number of times. Regulated entities such as depository participants and mutual fund registrars will be required to provide an acknowledgement every time a nomination is added or changed.
New nudges for investors without nomination
For accounts without nomination, including those where investors have opted out, depository participants and mutual fund RTAs will now have to:
- Send SMS and email reminders twice a year
- Show pop-up messages highlighting the benefits of nomination during login.
- These reminders will not be shown to investors who have already completed nomination formalities.
Why does this matter?
Nomination plays a crucial role in ensuring the smooth transfer of securities and mutual fund holdings to legal heirs after an investor’s death. In the absence of nomination, families often face lengthy documentation requirements, court procedures, and delays in accessing investments.
SEBI’s latest changes aim to reduce procedural hurdles while making nomination simpler, digital-friendly, and less paperwork-intensive for investors.
The regulator has also warned in its opt-out declaration format that prolonged inactivity in accounts without claims may eventually lead to investments being treated as unclaimed assets and transferred to the Investor Education and Protection Fund Authority (IEPF), as per applicable rules.
Disclaimer:
This article is for informational purposes only and should not be considered legal, tax, or investment advice. Investors are advised to consult their financial advisor, depository participant, mutual fund distributor, or legal expert before making any decisions related to nominations, transmission, or investment accounts. SEBI rules and operational procedures may be subject to further clarifications or amendments.
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