The Securities and Exchange Board of India (SEBI) plays a crucial role in regulating the securities market, ensuring investor protection, and fostering market development. Recently, SEBI issued a significant circular, SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/29, dated April 30, 2024, addressing the nomination requirements for mutual fund unit holders.
1. Background: The circular refers to Clause 17.16 of Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74, along with subsequent circulars, which mandate the nomination or opting out of nomination for individual unit holders of mutual funds by June 30, 2024.
2. Regulatory Review: Recognizing the need for simplification and cost reduction in compliance, SEBI established a working group to review the regulatory framework of mutual funds. Subsequently, public consultation ensued to gather feedback on proposed measures to enhance the ease of doing business in the mutual fund sector.
3. Key Decision: In response to the recommendations of the working group and the feedback received during public consultation, SEBI has decided to make the nomination requirement optional for jointly held mutual fund folios. This exemption aims to streamline processes and reduce administrative burdens for investors and fund managers alike.
4. Continued Compliance: While the exemption applies to jointly held folios, all other provisions regarding nomination requirements remain unchanged. It underscores SEBI’s commitment to maintaining regulatory integrity while fostering a conducive environment for market participants.
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Securities and Exchange Board of India
Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/29 Dated: April 30, 2024
To
All Mutual Funds
All Asset Management Companies (AMCs)
All Trustees of Mutual Funds
All Registrars to an Issue and Share Transfer Agents (RTAs)
Association of Mutual Funds in India (AMFI)
Sir / Madam,
Subject: Nomination for Mutual Fund Unit Holders – exemption for jointly held folios
1. Clause 17.16 of Master Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/74 dated May 19, 2023 for Mutual Funds (‘Master Circular’) read with Circular No. SEBI/HO/IMD/IMD POD1/P/CIR/2023/160 dated September 27, 2023 and Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/193 dated December 27, 2023, inter alia, prescribes the requirement for nomination/opting out of nomination for all the existing individual unit holder(s) holding Mutual Fund units either solely or jointly, by June 30, 2024, failing which the folios shall be frozen for debits.
2. In order to simplify, ease and reduce cost of compliance, a working group was constituted to review the present regulatory framework of Mutual Funds and recommend measures to promote the ease of doing business. Based on the recommendations of the working group, a public consultation was carried out.
3. Accordingly, it has been decided that the requirement of nomination specified under clause 17.16 of the Master Circular for Mutual Funds shall be optional for jointly held Mutual Fund folios.
4. 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 and SEBI Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/193 dated December 27, 2023, shall remain unchanged.
5. 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 Regulation 29A 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.
6. This circular is available on SEBI website at www.sebi.gov.in under the categories “Legal Framework -> Circulars”.
Yours faithfully,
Peter Mardi
Deputy General Manager
Investment Management Department
Tel. No. 022-2644 9233
Email: peterm@sebi.gov.in
