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Circular regarding submission of 'choice of nomination' for demat accounts- (Securities and Exchange Board of India) (10 Jun 2024)

MANU/SMIS/0022/2024

Capital Market

1. SEBI, vide circular no. SEBI/HO/MIRSD/POD-1/CIR/2023/193 dated December 27, 2023 extended the last date for submission of 'choice of nomination' for demat accounts and mutual fund folios to June 30, 2024 failing which demat accounts/folios shall be frozen for debits.

2. Further, as provided in Master Circular for RTAs dated May 07, 2024, the security holders holding securities in physical form whose folio(s) do not have PAN, Choice of Nomination, Contact Details, Bank Account Details and Specimen Signature updated, shall be eligible:

2.1. to lodge grievance or avail any service request from the RTA only after furnishing PAN, KYC details and Nomination.

2.2. for any payment including dividend, interest or redemption payment in respect of such folios, only through electronic mode with effect from April 01, 2024. An intimation shall be sent by the Listed Company to the security holder that such payment is due and shall be made electronically only upon complying with the above requirements.

3. Based on representations received from the market participants, for ease of compliance and investor convenience, the following has been decided for existing investors/ unit holders:

3.1. Non-submission of 'choice of nomination' shall not result in freezing of Demat Accounts as well as Mutual Fund Folios.

3.2. Securityholders holding securities in physical form shall be eligible for receipt of any payment including dividend, interest or redemption payment as well as to lodge grievance or avail any service request from the RTA even if 'choice of nomination' is not submitted by these security holders.

3.3. Payments including dividend, interest or redemption payment withheld presently by the Listed Companies/RTAs, only for want of 'choice of nomination' shall be processed accordingly.

4. Notwithstanding the above, all new investors/unitholders shall continue to be required to mandatorily provide the 'Choice of Nomination' for demat accounts/MF Folios (except for jointly held Demat Accounts and Mutual Fund Folios).

5. All existing investors/unitholders are encouraged, in their own interest, to provide 'choice of nomination' for ensuring smooth transmission of securities held by them as well as to prevent accumulation of unclaimed assets in securities market. The formats for providing Nomination and Opting-out of Nomination both in case of Demat Account and MF Folios are provided at Annexure-A and Annexure-B respectively of this circular.

6. In case of demat accounts, Depository Participants and in case of mutual fund folios, AMCs and RTAs shall encourage the demat account holders/mutual fund unit holders to update 'choice of nomination' by sending a communication on fortnightly basis by way of emails and SMS to all such demat account holders/mutual fund unit holders who have not provided the 'choice of nomination'. The communication shall provide guidance for demat account holders/mutual fund unit holders to provide 'choice of nomination'.

7. Further, to encourage the existing investors to provide 'choice of nomination', a pop- up shall be provided on web/mobile application/platform to the investors by Depositories and Depository Participants while logging into the Demat Account and by AMCs (including MF RTAs, other platforms providing online execution services) while logging into their MF account. This pop-up may be shown only to those clients whose MF Folios/demat account(s) do not have 'choice of nomination'.

8. The provisions of this circular, except clause 7 above, shall come into effect immediately in supersession of existing provisions. Further, Clause 7 of this circular shall be applicable from October 01, 2024.

9. Stock Exchanges, Depositories, AMCs, RTAs and Listed Companies are further advised to:

a) take necessary steps to implement the provisions of this circular, including making necessary amendment to the relevant bye-laws/business rules/regulations/operational instructions, as the case may be;

b) bring the provisions of this circular to the notice of their respective constituents and also disseminate this circular on their websites;

c) communicate to SEBI, the status of the implementation of the provisions of this circular; and

d) monitor the compliance of this circular.

10. All other provisions related to requirement of Nomination as provided in SEBI Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 dated May 19, 2023 for Mutual Funds, SEBI Master Circular No. SEBI/HO/MRD/MRD-PoD- 2/P/CIR/2023/166 dated October 06, 2023 for Depositories and SEBI Master Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2024/37 dated May 07, 2024 for RTAs shall remain unchanged.

11. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Section 19 of the Depositories Act, 1996 and Regulation 77 of SEBI (Mutual Funds) Regulations, 1996 and SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Tags : NOMINATION   CHOICE   DEMAT ACCOUNTS  

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