On January 10, 2025, the Securities and Exchange Board of India (SEBI) introduced sweeping changes to the nomination process for demat accounts and mutual fund folios. SEBI’s new rules, effective from Jun 1, 2025, aim to simplify asset transmission, reduce unclaimed assets, and offer more clarity to investors – especially individuals and Non-Resident Indians (NRIs).
Why These Changes Matter
Without a nominee, the process of transferring investments to legal heirs can be time-consuming, emotionally draining, and legally complex. SEBI’s revised framework ensures that your investments don’t get locked up due to paperwork or disputes, especially when your family needs them the most.
Key Changes at a Glance
| Change | Details |
| Mandatory Nomination | Compulsory for single holders to nominate or opt out |
| Number of Nominees Allowed | Increased from 3 to 10 nominees per account |
| Enhanced Nominee Details | PAN/Aadhaar, address, contact info, and relationship required |
| Nomination Modes | Online (OTP/e-sign), Offline (form with witness/signature) |
| Transmission on Death | Requires only death certificate + updated KYC; no affidavits/bonds |
| Authorising Nominees (if incapacitated) | Allowed to operate account; mandate can be revised anytime |
| Opt-Out Process | Online (OTP) or Offline (declaration form/video) |
What Investors Need to Do
1. Nomination Is Now Mandatory
If you are the sole holder of a demat or mutual fund account, you must either:
- Nominate someone
OR - Formally opt out of nomination.
Joint account holders are not required to nominate but may choose to do so.
Earlier, SEBI proposed freezing accounts without nominations, but that clause has been removed. Still, timely action is highly encouraged.
2. Up to 10 Nominees Allowed
As per the new rules of SEBI, you can now nominate up to ten individuals per account or folio. You may also assign a specific percentage to each nominee. If you don’t, the holdings will be distributed equally among them.
Example:
| Nominee | Relationship | Share (%) |
| A | Spouse | 50% |
| B | Daughter | 30% |
| C | Son | 20% |
3. Complete Details Are Now Required for Nominees
To enhance transparency and avoid disputes, the following information is now mandatory:
- Identification: PAN, driving licence number, last four digits of Aadhaar, or passport
- Contact Information: Address, phone number, and email ID
- Relationship with the investor
- Date of Birth (for minor nominees)
Any nomination lacking these will be considered Not in Good Order (NIGO) and rejected.
How to Submit or Update a Nomination
SEBI has made the process flexible and investor-friendly. NRIs can seamlessly update their Nominee details using SBNRI app and stay compliant:
Online Submission
- Use Aadhaar-based e-signature, digital signature, or
- OTP sent to your registered email and mobile
Offline Submission
- Fill and submit the physical nomination form
- Sign it (or provide a thumb impression with two witnesses)
In joint accounts:
- All holders must sign the form
- In “either or survivor” accounts, any one holder can update
What Happens After the Investor’s Death?
Thanks to the new rules of SEBI, asset transmission is now far simpler:
- Nominees need only a self-attested death certificate and updated KYC
- No affidavits, no indemnity bonds, no unnecessary paperwork
- Nominee acts as a trustee, not necessarily the legal heir
Legal heirs can still claim the assets if there’s a valid succession claim, but nominees help hold and protect the assets in the meantime.
Special Provision: Investor Incapacity
If an investor becomes physically or mentally incapacitated, they can authorise a non-minor nominee to operate the account. This can be:
- Full or partial mandate (in % or ₹ value)
- Revised or withdrawn any number of times
Opting Out of Nomination
Some investors may choose not to nominate anyone. In that case:
- Online: Submit OTP-authenticated declaration
- Offline: Submit a signed physical form or upload a video declaration (as per platform rules)
What NRIs Should Know
While SEBI’s circular does not specify separate rules for NRIs, they are fully covered under these guidelines. Here’s what you should keep in mind:
- Passport number can be used as ID
- Ensure your email and phone number are updated for OTPs
- Bank account used for asset transfer must be linked to your demat or mutual fund account (NRE/NRO)
Final Thoughts
SEBI’s new nomination rules are a welcome move towards protecting investors and ensuring smoother asset transmission. Whether you’re a resident or an NRI, reviewing and updating your nominations before March 1, 2025 is crucial.
Taking 10 minutes now could save your loved ones from months of legal stress later.
