SEBI Extends Deadline for Nomination Framework Implementation

The Securities and Exchange Board of India (SEBI) has extended the deadlines for the rollout of the second and third phases of its revamped nomination framework in the securities market. This decision comes in response to operational challenges faced by depositories and other stakeholders.

Revised Timeline: New Deadlines for Phase II and III

According to SEBI’s latest circular:

• Phase II, initially set to go live on June 1, will now take effect from August 8, 2025.
• Phase III, originally scheduled for September 1, has been pushed to December 15, 2025.

The extension was prompted by requests from key industry players, including depositories CDSL and NSDL, and associations like ANMI and CPAI, who sought additional time to complete essential system upgrades.

SEBI first introduced the updated nomination guidelines in January 2025 to bring greater transparency and reduce the volume of unclaimed assets in mutual fund folios and demat accounts. Following feedback from the industry, a phased implementation strategy was announced in February 2025.

Key Changes in the Nomination Process

Simplified Transfer in Joint Accounts

In the event of the death of one or more joint account holders, the assets will be transferred to the surviving holders without requiring fresh KYC, provided it wasn’t previously requested or submitted.

Revised Survivorship Rules

SEBI’s new guidelines clarify that the rule of survivorship will take precedence—ensuring smooth asset transfer among surviving joint holders without disrupting existing nominations or operational instructions.

Mandatory Nominations and Verification Measures

The framework mandates:

• Compulsory nomination for single-holder accounts.
• Nomination of up to 10 individuals per account or folio.
• Investors can specify percentage allocations to each nominee; otherwise, assets will be divided equally.
• If a nominee passes away before the account holder, their share will be redistributed pro rata among the surviving nominees.

SEBI clarified that nominees act as trustees for the legal heirs of the deceased investor. Importantly, legal heirs of a predeceased nominee have no claim to the assets.

Also Read: SEBI Tweaks Derivatives Trading Rules for Easing Investments for NRIs

Digital and Physical Options for Submission

To facilitate easier compliance, the updated system supports both digital and physical modes for submitting or updating nominations, catering to a broad spectrum of investors.

This structured extension is expected to offer depositories and market participants adequate time to align their infrastructure with SEBI’s robust nomination framework, paving the way for a more transparent and investor-friendly securities market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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