SEBI Postpones Deadline for 3rd Phase of Securities Market Nomination Framework

SEBI has postponed the rollout of the 3rd phase of its nomination framework for the securities market, which was originally set to begin on December 15. The regulator will announce a revised date later as stated in its circular. 

Reason for Deferment & Background 

The delay has been introduced due to operational difficulties flagged by depositories and other market stakeholders.  

Earlier in January, SEBI had released guidelines aimed at modernising the nomination system for mutual fund folios and demat accounts to improve clarity and reduce unclaimed assets.  

This was followed by a decision in February 2025 to introduce the norms in phases after industry bodies made certain representations.  

However, depositories, depository participants, and industry groups have again highlighted system-related challenges and sought additional time to make the required updates. 

Key Provisions of the Revamped Nomination Framework 

As per the circular, when one or more joint holders pass away, the surviving holder(s) will receive the assets without the need for fresh KYC, unless previously requested and not complied with.  

The framework issued to AMCs, depositories, and market intermediaries brings major changes such as revised rules on survivorship, mandatory nomination for single holders, and stronger verification measures.  

SEBI also detailed stricter procedures to authenticate and validate nominations. Investors will now be allowed to nominate up to 10 individuals and assign specific percentage allocations; where no allocation is provided, assets will be divided equally. If an investor and 1 nominee pass away, entities will distribute the assets proportionately among the remaining nominees.  

The regulator clarified that nominees act solely as trustees for legal heirs, and the heirs of a predeceased nominee have no direct claim. The revised system additionally supports both digital and physical modes for submitting or updating nominations. 

Read More: SEBI Widens Strategic Investor Definition for REITs and InvITs! 

Conclusion  

SEBI’s decision to delay the framework acknowledges industry challenges while ensuring a smoother transition to a more transparent and flexible nomination system. The revamped rules strengthen investor protection through enhanced verification, survivorship clarity, and expanded nomination options. The updated implementation date will guide stakeholders in adapting their processes effectively. 

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.  

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.