Introduction: The Securities and Exchange Board of India (SEBI) has issued a circular, SEBI/HO/MIRSD/POD-1/P/CIR/2023/193, dated December 27, 2023, addressing key stakeholders in the financial market. The circular pertains to the extension of timelines for providing the ‘choice of nomination’ in eligible demat accounts and mutual fund folios.
Detailed Analysis:
1. Previous Circulars: SEBI had previously extended the last date for submission of ‘choice of nomination’ for demat accounts and mutual fund folios to December 31, 2023, through circulars SEBI/HO/MIRSD/POD-1/CIR/2023/158 and SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/160 dated September 26, 2023, and September 27, 2023, respectively.
2. Further Extension: Considering representations from market participants and prioritizing ease of compliance and investor convenience, SEBI has now decided to extend the last date for submission of ‘choice of nomination’ to June 30, 2024.
3. Communication Strategy: The circular emphasizes the role of Depository Participants, Asset Management Companies (AMCs), and Registrars to an Issue and Share Transfer Agents (RTAs) in encouraging demat account holders and mutual fund unit holders to fulfill the nomination requirement. Communication through emails and SMS on a fortnightly basis is recommended for non-compliant holders, providing guidance on the nomination process.
4. Responsibilities of Market Entities: Stock Exchanges, Depositories, AMCs, RTAs, and Listed Companies are instructed to implement the circular’s provisions, update bye-laws/rules, inform constituents, disseminate the circular on their websites, report the status of implementation to SEBI, and monitor compliance.
5. Unchanged Provisions: The circular clarifies that all other provisions related to the requirement of nomination, as outlined in SEBI Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 for Mutual Funds and SEBI Master Circular No. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/166 for Depositories, shall remain unchanged.
6. Regulatory Authority: SEBI issues this circular under its conferred powers by Section 11(1) of the Securities and Exchange Board of India Act, 1992, to safeguard investor interests and regulate the securities market.
7. Accessibility: The circular is made available on the SEBI website under the category “Legal Framework -> Circulars.”
Conclusion:
In conclusion, the SEBI circular dated December 27, 2023, signifies a proactive approach to facilitate compliance and enhance investor convenience. Market participants are urged to adhere to the extended timelines and communication strategies outlined in the circular, reinforcing SEBI’s commitment to investor protection and the development of a well-regulated securities market. For further inquiries, stakeholders can reach out to Srishti Ambokar, Deputy General Manager, Market Intermediaries Regulation and Supervision Department, at srishtijc@sebi.gov.in or 022-2644 9354.
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Securities and Exchange Board of India
Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/193 Dated: December 27, 2023
To
All Recognized Stock Exchanges
All Recognized Depositories
All Mutual Funds
All Asset Management Companies (AMCs)
All Trustee Companies/ Board of Trustees of Mutual Funds
Stock Brokers (Trading Members) through Recognized Stock Exchanges
Depository Participants through Depositories
All Registered Registrars to an Issue and Share Transfer Agents (RTAs)
All Listed Companies through Recognized Stock Exchanges
Association of Mutual Funds in India (AMFI)
Dear Sir / Madam,
Subject: Extension of timelines for providing ‘choice of nomination’ in eligible demat accounts and mutual fund folios
1. SEBI, vide circular nos. SEBI/HO/MIRSD/POD-1/CIR/2023/158 dated September 26, 2023 and SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/160 dated September 27, 2023, extended the last date for submission of ‘choice of nomination’ for demat accounts and mutual fund folios respectively to December 31, 2023.
2. Based on representations received from the market participants, for ease of compliance and investor convenience, it has been decided to extend the last date for submission of ‘choice of nomination’ for demat accounts and mutual fund folios to June 30, 2024.
3. Depository Participants, AMCs and RTAs shall encourage the demat account holders/ mutual fund unit holders to fulfil the requirement for nomination/opting out of nomination by sending a communication on fortnightly basis by way of emails and SMS to all such demat account holders/ mutual fund unit holders who are not in compliance with the requirement of nomination. The communication shall provide guidance to provide nomination or opting out of nomination.
4. Stock Exchanges, Depositories, AMCs, RTAs and Listed Companies are further advised to:
a) take necessary steps to implement the provisions of this circular, including making necessary amendment to the relevant bye-laws/ business rules / regulations / operational instructions, as the case may be;
b) bring the provisions of this circular to the notice of their respective constituents and also disseminate this circular on their websites;
c) communicate to SEBI, the status of the implementation of the provisions of this circular; and
d) monitor the compliance of this circular.
5. All other provisions related to requirement of Nomination as provided in SEBI Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 dated May 19, 2023 for Mutual Funds and SEBI Master Circular No. SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/166 dated October 06, 2023 for Depositories shall remain unchanged.
6. This circular is issued in exercise of powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Section 19 of the Depositories Act, 1996 and Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
7. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework -> Circulars”.
Yours faithfully,
Srishti Ambokar
Deputy General Manager
Market Intermediaries Regulation and Supervision Department
Tel. No. 022-2644 9354
Email id – srishtijc@sebi.gov.in
