(4-minute small case Read-time dated 24th July 2021)
SEBI has issued a circular on July 23, 2021 making it mandatory for Stock Brokers/depository to provide a Nomination facility to all Demat account holders. This is a very important initiative taken by the Securities and Exchange Board of India (SEBI) for protecting and safeguarding the interests of the shareholders. The Companies Act,2013 provides the facility for Nomination by the holder of securities.

Let’s understand more about the Nomination facility and its importance.
1 What is the meaning of the new SEBI Circular about Nomination?
2 Is it mandatory /compulsory for all investors ?
3 What is the procedure for updation of the Nomination facility?
4 What are the details required to be mentioned in the Nomination form?
5 Can I opt out of the Nomination facility anytime ?
6 Does the Nomination facility required to be witness ?
7 What happens if I don’t update nomination details or I forgot?
8 What is Nomination?
9 Who can be a Nominee?
10 Why Nomination is important?
11 Who can nominate?
12 Can an NRI nominate?
13 Who can be a nominee?
14 Can a minor be a nominee?
15 Can separate nomination be made for each security held in a depository account?
16 Can the nominee be changed?
1 What is the meaning of the new SEBI Circular about Nomination?
SEBI vide its circular dated July 23, 2021 (SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 ) issued instructions to Stock Brokers/Depositories to provide a Nomination facility for all investors opening new Demat accounts on or after October 01, 2021. Further, all existing eligible trading and Demat account holders shall provide a choice of nomination before March 31, 2022
2 Is it mandatory /compulsory for all investors?
Yes. It's mandatory /compulsory for all investors who will be opening new Demat accounts after 1st October 2021. It is also mandatory/compulsory for all existing investors and Demat account holders to provide and update nomination details before March 31, 2022.
3 What is the procedure for updation of the Nomination facility?
Your stockbroker/depository will be providing the necessary facility for updation of Nomination facility for all new investors who will be opening Demat accounts after 1st October 2021. For existing Demat account holders, you will receive necessary instructions from your stockbroker to update the details of Nominee very soon.
4 What are the details required to be mentioned in the Nomination form ?
You can nominate maximum of three individuals as your Nominee who will be entitled to claim your investments or money in case of your unforeseen death. Following details are required to be mentioned like, Name of the Nominee, share of each nominee, Relationship with an applicant, Address, Mobile Number, Email id, Nominee identification details like PAN, Aadhar etc.
5 Can I opt-out of the Nomination facility anytime?
Yes, you can opt-out of Nomination already registered, anytime by providing an undertaking form to the stockbroker or depository.
6 Does the Nomination facility required to be a witness?
No, as per this new SEBI regulation, online declaration and nomination facility with e-sign do not require any witness. However, if Demat account holder puts a thumb impression then witness is mandatory.
7 What happens if I don’t update nomination details or I forgot?
All existing Demat account holders will be frozen after 31st March 2022 if the details of the Nomination are not updated before March 2022.
8 What is Nomination?
This is a process by which an investor can assign someone to claim his/her investments/shares in case of sudden unforeseen death.
9 Who can be a Nominee?
This is generally a first relative like spouse, children, parents, siblings etc. You can even assign multiple Nominees and specify a percentage for each one.
10 Why Nomination is important?
Nomination is an essential exercise which a lot of us omit out, which subsequently creates a lot of undesirable trouble for our nearest ones.
However, in the absence of nomination, the procedure of settling a demise claim may additionally require a host of documents, which includes death, succession certificates, a will or a court order. Although it may sound easy on paper, it ends up being a long drawn procedure in actual life and it is no longer a scenario in which you would desire to put your loved ones at a time, which would anyhow be an already emotional situation for them. 11 Who can nominate?
Nomination can be made only by individuals holding beneficiary accounts either singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, karta of Hindu Undivided Family, holder of power of attorney cannot nominate.
12 Can an NRI nominate?
Yes. An NRI can nominate directly. But, the power of attorney holder cannot nominate on behalf of NRI.
13 Who can be a nominee?
Only an individual can be a nominee. A nominee shall not be a society, trust, body corporate, partnership firm, karta of Hindu Undivided Family, or a power of attorney holder.
14 Can a minor be a nominee?
Yes, a minor can be a nominee. In such a case, the guardian will sign on behalf of the nominee, and in addition to the name and photograph of the nominee, his/her name and address as well as the photograph of the guardian must be submitted to the DP.
15 Can separate nominations be made for each security held in a depository account?
No. Nomination can be made accountwise and not security-wise.
16 Can the nominee be changed?
Yes, the nomination can be changed anytime by the account holder/s by simply filling up the nomination form once again and submitting it to the DP.
The article has been written and published by Mr. Vinayakk V Joshi, a SEBI Registered Research Analyst having registration number- INH000008330 under SEBI (Research Analyst) Regulations, 2014.
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