SEBI’s new Nomination Rules for Demat and Mutual Funds will enable up to ten candidates beginning in September 2025. Understand major changes, paperwork, timelines, and investor rules.
Investing is more than simply increasing money; it is also about ensuring that it flows easily to your loved ones when you die. This is where nominations come in.
To simplify and protect the nomination process, SEBI has released a new circular (dated February 16, 2025), which includes additional operational parameters supplied by KFintech. These new rules are critical for all mutual fund and demat account holders, and certain modifications will take effect on June 1, 2025 and September 1, 2025.
Let’s lay it down in simple terms using real-world examples.
What Is Nomination and Why Is It Important?
A nomination is a feature that allows you (the investor) to designate someone who can inherit your investments after your death. Without a nomination, your family may have to go through lengthy legal proceedings.
For example, Mr. Ramesh, a paid professional, invested in mutual funds but did not designate anyone. When he died unexpectedly, his widow tried for months to gain access to the cash. If Ramesh had nominated her, the procedure would have gone much more smoothly.
What SEBI’s February 2025 Circular Says
No More Freeze for Not Nominating
Previously, investors had a deadline to either designate someone or opt out, after which their accounts may be locked. That is no longer there. You may continue investing without worrying about your account getting locked.
However, SEBI still recommends that you designate or expressly opt out for your family’s safety.
What’s Changing from June 1 and September 1, 2025?
KFintech has provided important modifications to the nomination procedure, particularly for mutual fund portfolios. Here is what’s new.
1. New Nomination Form Format – Effective June 1, 2025
Starting June 1, 2025, a new nomination form format will be introduced. If you are making a nomination on or after June 1, please use the new form. The opt-out form stays the same. There are no modifications there.
2. Number of Nominees You Can Add
| Period | Max Nominees Allowed |
| Until August 31, 2025 | Up to 3 nominees |
| From September 1, 2025 | Up to 10 nominees |
What this means:
If you’ve been restricted to adding just 3 nominees, you’ll be happy to know that from September 1, you can nominate up to 10 individuals, giving you more flexibility to distribute your investments.
3. Mandatory Information for Each Nominee
To avoid processing delays or rejections (known as NIGO – Not in Good Order), the following information is required for each nominee:
- Full Name
- Relationship with the investor
- Percentage of share
- Address
- Email ID
- Mobile number
- Any one of the following identity details:
- PAN
- Driving License Number
- Last 4 digits of Aadhaar
- Passport Number
If any of this is missing, your nomination will be rejected.
4. Date of Birth for Minor Nominees
If you are nominating a minor, you must include the nominee’s date of birth (DOB). However, naming a guardian is optional but recommended for clarity.
For example, Mrs. Seema nominates her 10-year-old son as a nominee. She must provide his birth date, but she can choose whether or not to name her brother as guardian.
5. Witnesses for Thumb Impressions
If you sign the nomination form using a thumb impression (instead of a signature), you must include the:
- Name, address, and signatures of two witnesses
This is done to ensure the legitimacy of the nomination.
6. Who Can Operate Your Account If You’re Incapacitated?
If you are nominating a minor, you must include the nominee’s date of birth (DOB). However, appointing a guardian is optional but advised for clarity.
For example, Mrs. Seema nominates her 10-year-old son as a nominee. She must provide his birth date, but she can choose whether or not to name her brother as guardian.
7. Mode of Signing the Nomination Form – Based on Holding Type
| Mode of Holding | Who Can Sign the Form |
| Single / First Holder | Only first holder must sign |
| Joint Holding | All holders must sign |
| Either or Survivor / Anyone or Survivor | Any one holder can sign |
Ensure your signature matches with your records, or else it may be rejected.
8. What Happens After the Investor’s Death?
If the investor passes away:
- The nominees can either:
- Continue as joint holders among themselves, OR
- Open separate single folios/accounts in their own name.
- If some nominees don’t claim their share, the unclaimed portion stays with:
- AMC in case of mutual funds
- Depository in case of demat accounts
9. No Limit on Nomination Updates
There is no limit to how many times you can add, alter, or delete nominations. You can edit nominations as many times as you wish, and the AMC or DP will acknowledge each modification.
Why You Should Act Now
- Avoid Legal Complications: Without nomination, your family may need to get legal heir certificates or go to court.
- Peace of Mind: You know your investments are protected and will go to the right person.
- Flexibility: You can nominate, update, or delete nominees anytime.