ICCK

Bringing relief to a large number of investors who are yet to make nominations in their demat accounts and mutual fund folios, markets regulator Sebi on Monday said that their investments through these two channels will not be frozen. Those investors will continue to receive dividends, interest, redemption proceeds from such accounts, Sebi said.

However, all new investors under Sebi will have to compulsorily either nominate or opt out from nominating anyone in their demat accounts and MF folios.

The change in Sebi's stance came after investors and mutual fund distributors made representations to the markets regulator to do away with this rule. "Based on representations from market participants, for ease of compliance and investor convenience," Sebi has decided, among other issues, "non-submission of 'choice of nomination' shall not result in freezing of demat accounts as well as mutual fund folios."

About two months ago, Sebi had diluted the nomination rules by making nomination voluntary in jointly-held MF folios and demat accounts. For Sebi, the main reason for insisting on nomination was to avoid any complications including delay in transfer of assets in demat accounts and MF folios during the time of succession.

Sebi, however, said that all brokers and fund houses should insist on getting nominations done in demat accounts and MF folios. It further said that all new investors/unit holders would continue to be required to mandatorily provide the 'choice of nomination' for demat accounts/MF folios (except for jointly-held demat accounts and MF folios). The regulator has asked depository participants, AMCs or RTAs to encourage demat account holders or mutual fund unit holders, respectively, to update 'choice of nomination' by sending a communication on a fortnightly basis by way of emails and SMS to all such investors, who have not provided the 'choice of nomination'.

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