Key Proposals:
Multiple Nominees: SEBI proposes to allow investors to nominate multiple individuals, with a maximum limit of 999 nominees. This additional flexibility aims to accommodate various scenarios and preferences of investors.
Unrestricted Access: The nomination facility would be made more accessible, enabling investors to add, change, or cancel nominees without constraints. SEBI intends to streamline the process and eliminate unnecessary hurdles for investors.
Nominee Details: SEBI plans to mandate the provision of nominees’ contact details and personal identifiers, such as parental names and government-issued identities. This measure aims to facilitate seamless communication and identification of nominees by institutions following the investor’s demise.
Secure Nomination Process: Nominations must be made, changed, or cancelled using secure and verifiable methods, including digital signature certificates, Aadhaar-based eSign, or physical signatures of investors. Dual authentication may also be required to ensure the integrity of the nomination process.
Record Maintenance: Mutual funds and brokers would be required to maintain records of all changes related to nominations. Investors would have access to nominee details through account aggregator services and other designated routes.
Guardian Specifications: SEBI intends to mandate mutual funds and brokers to provide options for specifying guardians, particularly for minor nominees. This measure aims to ensure appropriate representation and protection of minor investors’ interests.
Additional Details: Investors may have the option to provide additional details, such as specifying a guardian for minor nominees, in case of incapacity due to permanent or temporary reasons. This provision aims to address potential scenarios where investors are unable to conduct transactions.
Asset Transfer Process: Assets transferred to nominees would be subject to completion of Know-Your-Customer (KYC) requirements and clearance from creditors, particularly in cases where shares or mutual fund units are pledged by the investor.
Dispute Resolution: In case of disputes, nominees and claimants would be required to resolve issues among themselves without involving depositories, mutual funds, or their registrars. This approach aims to streamline dispute resolution processes and minimize administrative burdens.
Opt-Out Option: Investors would retain the option to ‘opt-out’ of the nomination process if they choose not to declare a nominee.
SEBI’s Previous Circulars:
SEBI had previously issued circulars mandating demat account holders and mutual fund investors to declare nominees or ‘opt-out’ of the nomination process. The deadlines for compliance were initially set for March 31, 2022, and June 30, 2024, respectively, but have been extended to June 31, 2024, owing to various factors.In Conclusion:
SEBI’s proposed changes to the nomination process aim to enhance investor convenience, transparency, and protection. By implementing these measures, SEBI seeks to ensure that investors’ interests are safeguarded, and the transfer of assets to nominees is executed smoothly and efficiently. Investors are encouraged to stay informed about these developments and comply with regulatory requirements to secure their investments and financial futures.🚀 Ready to level up your finances? Say goodbye to tax woes with Savingz! 🎉
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