Sebi issued the regulation for mandatorily filing nomination or opting out of nominations in its circular dated July 23, 2021. Existing investors’ demat and trading accounts will be frozen if they do not comply with this guideline.
New accounts will not be established after October 1, 2021 if this regulation is not followed. If you haven’t made a nomination in your demat or trading account, or if you haven’t issued a declaration to opt out of making a nomination, your account will be locked on March 31, 2024.
Previously, the deadline to comply with this rule was March 31, 2022. However, the Securities and Exchange Board of India (Sebi) has extended this deadline by one year in a circular dated February 24, 2022, to March 31, 2024.
According to a Sebi circular dated July 23, 2021, “Investors opening new trading and or demat account(s) on or after October 01, 2021, shall have the option of providing nomination or opting out nomination, as follows
a) The format for nomination form is given in Annexure – A to this circular
b) opt-out of nomination through ‘Declaration Form’, as provided in Annexure – B to this circular.
The circular further noted that when the paperwork is physically signed by the account holder, no witnesses would be required to file the nomination for the trading and demat accounts. Furthermore, the nomination/declaration form submitted electronically utilising the e-sign function will not require a witness.
However, if the account holder uses a thumb impression instead of a signature, then a witness signature will have to be on the form as well. According to the Sebi’s initial circular issued in July 2021
“All existing eligible trading and demat account holders shall provide choice of nomination as per the option given in paragraph 2 above, on or before March 31, 2022, failing which the trading accounts shall be frozen for trading and the demat accounts shall be frozen for debits.”
Depositories such as NSDL and CDSL are advising their clients through email about the need to submit nominations for trading and demat accounts. To opt out of nomination, the Securities Exchange Board of India (SEBI) has mandated the filing of nomination details and a declaration by investors opening new demat account(s) on or after October 1, 2021.
SEBI also mandated that all existing qualifying demat account holders provide the aforementioned information. SEBI recently extended the deadline for submitting nominations or opting out of nominations and established a new option for offering nominations.
“Investors should be aware of the following,” the NSDL communication to consumers wrote. Sebi confirmed in a circular dated February 24, 2022, that supplying a cell phone number, email ID, and identity details of the nominee or guardian of the underage nominee is now optional.
Identification information includes the nominee’s image and signature, PAN, Aadhaar, and so on. Previously, it was required to enter the nominee’s data when submitting the form.
Published by – Kiruthiga K
Edited by – Kritika Kashyap
