Appointing nominees: a guide for investors

• Any individual, including minors (for minors, a guardian must also be appointed).
• Note: A trust or entity cannot be appointed as a direct nominee; it must be an individual.
• You can appoint more than one nominee and specify their percentage share.

Note: Nomination is separate from your will. While a nominee receives the proceeds, the ultimate legal ownership may be governed by inheritance laws unless stated otherwise in a will.

SEBI requires all investors to declare their nomination preference for mutual fund schemes and other regulated investment products. Investors may either appoint one or more nominees or choose not to nominate anyone. However, it is mandatory to explicitly indicate this choice in the nomination section of the application form. If you do not wish to appoint a nominee, you must select or state “No” in the nomination section.

• Leaving this section blank is not compliant with regulatory norms and may create delays or complications in the transfer of funds if needed.
• The declaration ensures clarity in ownership transfer, reduces the scope for disputes and protects both the investor’s intent and the nominee’s rights.

Completing the nomination declaration whether appointing someone or explicitly opting not to means investors comply with SEBI rules and safeguard the smooth execution of their investment instructions.

Do:

• Choose someone you trust completely.
• Clearly define percentage shares if there are multiple nominees.
• Keep your nomination details updated after major life events like marriage, the birth of a child or the death of an existing nominee.
• Inform your nominee about their role and responsibilities.

Don’t:

• Leave the nomination section blank.
• Confuse nominee rights with inheritance rights. Appointing a nominee only facilitates transfer; inheritance laws govern ownership.

Life circumstances move on and your nominee choice may change over time. You can:

• Update your nominee and modify nominees or % share.
• Cancel a nomination if required.

Nomination helps ensure the smooth transfer of your investments to your loved ones. By appointing a trusted nominee and keeping these details updated or explicitly declaring your choice even if you decide not to appoint one, you comply with SEBI regulations. Nomination helps financial institutions facilitate the transfer of assets to legal heirs if the investor passes away and allows them to reach out to the nominee if investments remain unclaimed for a long period.