The Securities and Exchange Board of India (SEBI), the capital markets regulator, has announced revisions to nominee requirements for demat accounts and mutual fund folios, making the process more straightforward for investors. Starting September 1, 2026, nomination will become the default option for all new single-holder accounts.
In a circular issued on Friday, SEBI stated that investors opening single-holder demat accounts or mutual fund folios will be required to provide nomination details unless they explicitly choose to opt out via a declaration form. Conversely, joint accounts will continue to allow optional nomination.
This decision follows feedback from market participants, who highlighted operational challenges with earlier nomination regulations introduced in January 2025.
Revised Framework
Under the new guidelines, investors may nominate up to three individuals. In cases where there are multiple nominees, the holdings can either remain in the same account after the investor’s passing or be separated into distinct accounts or folios according to the respective entitlements.
SEBI has also simplified the physical nomination process by eliminating the requirement for witness signatures if the investor signs the nomination form with a regular signature. Witnesses will now only be necessary when the investor uses a thumb impression.
The regulator has permitted both online and offline nomination submissions. Online nominations can be validated using digital signatures, Aadhaar-based electronic signatures, or other legally recognized e-sign facilities, as well as two-factor authentication where a one-time password is sent to the investor’s registered mobile number and email.
In a significant reduction of requirements, the only mandatory information for nominations will now be the nominee’s name and their relationship with the investor. Optional information includes mobile numbers, email addresses, share allocations among nominees, and identity documents.
If the investors do not specify how the holdings should be divided among the nominees, the assets will be shared equally, with any leftover fractions transferred to the first nominee listed on the form.
To promote broader participation in the nomination process, depository participants and mutual fund registrars are required to send bi-annual reminders via email and SMS to investors who have not assigned nominees. Additionally, online platforms will display pop-up messages to remind investors of the benefits of nomination during their first login each day.
SEBI’s revised rules aim to enhance investor onboarding, streamline succession processes, and reduce the accumulation of unclaimed financial assets in the securities market. The circular will affect both new and existing accounts and folios, coming into effect from September 1, 2026.
Published on May 29, 2026.
