In a relief news for mutual fund investors, SEBI issued a notification

Mutual Fund: There is good news for mutual fund investors. Market regulator Sebi on Monday scrapped the rule of freezing demat and mutual fund accounts in case of non-granting of ‘nomination option’, easing rules for existing investors. Further, investors holding securities in physical form will now be eligible to receive any payments like dividends, interest or redemption of securities. Further, investors will be entitled to lodge a complaint or request any service from the RTA (Registrar of Issue and Share Transfer Agent) even if they do not opt ​​for the ‘nomination option’.

What are the details?

Earlier, the Securities and Exchange Board of India (SEBI) had set a June 30 deadline for all existing individual mutual fund holders to submit nominee details or opt out of nomination. If the rules are not followed, withdrawals from their account may be banned. However, Sebi, in a circular issued on Monday, said that in view of ease of compliance and convenience of investors, it has been decided not to provide ‘nomination option’ to existing investors or unitholders with mutual fund accounts.

What did the market regulator say?

The market regulator said that payments currently withheld due to non-granting of ‘nomination option’ by listed companies or RTAs will also be settled now. Along with this, SEBI clarified that the system of giving mandatory ‘nomination option’ to all new investors and mutual fund unit holders for demat accounts/mutual fund portfolios will continue.

The regulator has asked depository participants, AMCs or RTAs to encourage demat account holders or mutual fund unitholders to update their ‘option of nomination’ by sending fortnightly messages through email and SMS. The details to be updated should include the nominee’s name, nominee’s shareholding and relationship with the applicant. SEBI has also issued a format to provide option for nomination and withdrawal of nomination in demat account and MF folio.