SEBI Simplifies Nomination Rules For Demat Accounts, Mutual Fund Folios; New Norms Effective From September 1

The Securities and Exchange Board of India (SEBI) on Friday modified the nomination norms for demat accounts and mutual fund folios. The changes are aimed at simplifying investor onboarding and the nomination process.

Under the revised norms, investors opening new single-holder demat accounts or mutual fund folios will have to either nominate a beneficiary or formally opt out of nomination. For jointly held accounts and folios, nomination will be optional.

SEBI has also permitted investors to nominate up to three persons. In case of multiple nominees, the nominees may either continue in the same account or folio. Alternatively, they may open separate accounts or folios for their respective holdings after the investor's demise.

The circular allows nominations to be submitted either online or offline. For online nominations, validation may be carried out through a Digital Signature Certificate, Aadhaar-based e-sign, any other e-sign facility recognised under the Information Technology Act, 2000, or two-factor authentication.

For physical nominations, witness signatures will not be required where the account or folio holder signs the form. However, where the holder affixes a thumb impression, the nomination must be witnessed by two persons. The names and addresses of the witnesses must also be captured in the nomination form.

The circular will come into effect from September 1, 2026.