No More Unclaimed Investments: SEBI Makes Nomination Mandatory from Sept 2026 [Read Circular]

The Securities and Exchange Board of India (SEBI) has issued a circular making nomination mandatory for all demat accounts and mutual fund folios from September 1, 2026.

The regulator’s latest directive modifies earlier norms issued in January 2025, after industry stakeholders flagged operational challenges. The new framework aims to simplify investor onboarding and ensure smoother transmission of securities.

Highlights of the Circular

• Mandatory Nomination or Opt-Out:

For single-holder accounts, investors must either provide nominee details or submit a formal opt-out declaration. Joint accounts retain nomination as optional, but changes require consent from all holders.

• Up to Three Nominees Allowed:

Investors can nominate up to three individuals. In case of multiple nominees, they may continue jointly in the same account or split holdings into separate accounts after the investor’s demise.

• Digital & Physical Options:

Nomination can be filed online using Aadhaar e-sign, digital signature, or OTP-based two-factor authentication. Offline forms require a wet signature; thumb impressions must be witnessed by two individuals.

• Information Requirements:

Nominee’s name and relationship are mandatory, with date of birth required if the nominee is a minor. Optional fields include contact details, percentage share, and guardian information.

• Opt-Out Declaration:

Investors choosing not to nominate must sign a declaration acknowledging that transmission to heirs may be delayed and assets could eventually be transferred to the Investor Education and Protection Fund (IEPF).

• Reminders & Transparency:

Account statements will display nominee details or a Yes/No flag. Entities must send bi-annual reminders and display pop-ups to investors without nominations.

The circular, issued under Section 11(1) of the SEBI Act, 1992, supersedes all previous SEBI directives on nomination. Depositories and mutual fund registrars have been instructed to amend their bye-laws and upgrade systems to comply with the new norms.

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