SEBI Extends Timelines for Nomination of Mutual Fund Unit Holders
Introduction
SEBI, through several circulars, has outlined the requirement for existing individual unit holders to nominate or opt out of nomination for their mutual fund units by September 30, 2023. Failure to comply with this requirement would result in the freezing of folios for debits. However, based on feedback from market participants, SEBI has decided to extend the timeline for freezing folios to January 1, 2024. This article provides an overview of SEBI’s directives and the actions required by AMCs and RTAs to fulfill these requirements.
Extension of Timelines for Nomination
According to Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 dated June 15, 2022, SEBI Circular No. SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/105 dated July 29, 2022, and SEBI Circular No. SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/47 dated March 28, 2023, all existing individual unit holders are required to nominate or opt out of nomination for their mutual fund units by September 30, 2023. Failure to comply with this requirement would result in the freezing of folios for debits.
Change in Implementation Date
The provision for freezing folios will now be effective from January 1, 2024, instead of September 30, 2023, based on feedback from market participants. This extension provides unit holders with additional time to fulfill the nomination requirement.
Responsibilities of AMCs and RTAs
AMCs and RTAs have an important role to play in ensuring compliance with the nomination requirement. They are directed to regularly communicate with unit holders via email and SMS every two weeks, urging them to fulfill the nomination requirement or opt out. These communications should include clear instructions and guidance on how unit holders can provide their nomination details or opt out of nomination.
Unchanged Provisions
All other provisions stated in Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 dated June 15, 2022, and SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/105 dated July 29, 2022, will remain unchanged. Unit holders and market participants should refer to these circulars for detailed information on the nomination process and related guidelines.
Conclusion
SEBI’s extension of the timeline for nomination or opting out of nomination for mutual fund unit holders provides them with additional time to fulfill this requirement. AMCs and RTAs, in accordance with SEBI’s directives, must actively communicate with unit holders and guide them through the nomination process. This circular promotes investor interests and regulates the securities market under SEBI’s authority.
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
