SEBI Makes Nomination Mandatory for Demat, MF Accounts by Sept 2026

The Securities and Exchange Board of India (SEBI) has implemented new regulations making nomination mandatory for single-holder demat accounts and mutual fund folios, effective September 1, 2026. This directive aims to streamline the nomination process and ultimately simplify the transfer of securities for legal heirs after an investor’s passing.

Under these revised guidelines, investors can no longer leave the nomination field blank. They are required to either provide nominee details or submit a signed declaration formally opting out of nomination for new or existing accounts. For jointly held demat accounts or mutual fund folios, however, nomination remains optional, provided all joint holders agree.

Investor Choices for Nomination

Investors now have clear options to comply with the new mandate:

• Appoint up to three nominees.
• Specify the percentage of assets allocated to each nominee.
• If no allocation is specified, assets will be distributed equally among all registered nominees.
• Remaining fractional units or odd lots will transfer to the first nominee listed.

For individuals who choose not to appoint a nominee, a formal opt-out declaration must be submitted. This declaration can be processed through their broker, bank, or mutual fund platform, ensuring regulatory compliance while documenting the investor’s decision.

Simplified Asset Transmission for Heirs

In situations where no nominee is registered, assets are still transferred to legal heirs via the existing securities transmission facility. SEBI has enhanced this process by introducing a ‘quick transmission processing’ (QTP) facility for small-value claims.

Key details of the simplified transmission process include:

• QTP applies to physical holdings up to ₹10,000.
• QTP also covers dematerialized holdings up to ₹30,000.
• Limits for simplified documentation have doubled to ₹10 lakh for physical holdings per listed company.
• Dematerialized holdings under simplified documentation now extend to ₹30 lakh per beneficial owner.

The new rules aim to mitigate common investor errors, such as failing to update nominee details after significant life events like marriage or divorce. Avoiding incorrect nominee details or percentage allocations is also crucial, as is understanding that a nominee facilitates transfer but does not automatically become the legal owner of assets.