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Why you must complete your mutual fund nominations before 31st December 2023?

As per SEBI rules, mutual fund investors must have nominees in their folios or explicitly opt out. Otherwise they will face restrictions in selling units.

Why you must complete your mutual fund nominations before 31st December 2023?


Posted on 24 Sep 2023 • Updated on: 05 Jan 2024
Author: Sayan Sircar
6 mins read
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As per SEBI rules, mutual fund investors must have nominees in their folios or explicitly opt out. Otherwise they will face restrictions in selling units.

Why you must complete your mutual fund nominations before 31st December 2023?

This article is a part of our detailed article series on the concept of nominees, legal heirs and wills in India. Ensure you have read the other parts here:

📚 Topics covered:

Update: As on 29-Dec-2023, the deadline has been pushed to 30-Jun-2024 from 31-Dec-2023.

In accordance with SEBI Circulars #SEBI/HO/IMD/IMD–II DOF3/P/CIR/2022/82 dated Jun 15, 2022, and SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/47 dated Mar 28, 2023, in case of existing individual unitholder(s), who haven’t registered their nomination / opting out of nomination, before June 30, 2024, their folios will be frozen for any debits including redemption. [Redemption, Switch and Transactions of already registered Systematic Transfer Plans (STP) / Systematic Withdrawal Plans (SWP) will not be allowed].

Why nomination is important for mutual funds?

Mutual Fund Nomination Deadline 1st Oct 2023

Having a nominee in your mutual funds will make transmission easier in case the investor dies.

What happens if the investor dies and nomination is not present?

In case of absence of nomination, the legal heirs will have to produce additional documentation like a succession certificate which might make the process lengthy and cumbersome.

It might also happen, and this is very common, that the family does not have any clue what investments are there and how to access them. In a future article, we will cover the best way to make a list of assets and share them with family members to avoid such a situation.

Did you know that we have a private Facebook group which you can join for free and ask your own questions? Please click the button below to join.

Does the nominee necessarily get the units after the death of the investor?

A nominee is a temporary custodian of assets until the transfer to the legal heir is completed

Only the legal heir get the units eventually after the investor’s death. The nominee is just the executor of the estate but may not necessarily be the legal heir.

Related:
How a fight between brothers over nomination of their father's shares required the Supreme Court to pass a judgement

What happens after the deadline if nomination is not updated?

As per the AMFI notification, those folios will not be allowed to sell any units either as a redemption or a switch out.

What do you have to do about nomination?

As per the AMFI notification, you can either update the nominee details in mutual fund portfolios, or explicitly opt out. Since one folio might have multiple mutual funds in it, you need to update only on a per-folio basis and not on a per-fund basis.

There are multiple ways to update the nomination:

Via RTA websites

CAMs and KFintech websites offer the facility to update nominees or opt out fully online. We will not give the direct links here, to avoid phishing or stale links, but you can use Google search:

In this method you need to remember which AMCs are with CAMs and which are with KFintech and act accordingly. The easier on-stop method is described below.

Via MFCental website

Mfcentral Update Nominee Details

MFCentral offers all mutual funds serviced by both CAMs and KFintech. You can seee all folios mapped to MFCentral and update them in one place.

Via demat account

If you have invested in mutual funds via your demat account, for example with Zerodha Coin, please login to your demat account to check the nomination. The same nomination for stocks will be carried over to your mutual fund units.

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This post titled Why you must complete your mutual fund nominations before 31st December 2023? first appeared on 24 Sep 2023 at https://arthgyaan.com


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