28-Sep-2023
2 mins read
Extended Deadline
The Securities and Exchange Board of India (SEBI) has provided a breather for mutual fund account holders by extending the deadline until January 1. The extended time frame allows investors to nominate a beneficiary or opt out by submitting the necessary declaration form.
The Consequence of Non-Compliance
Should mutual fund account holders neglect or choose not to adhere to these guidelines, they will face the potential freezing of their folios. The market’s regulatory body emphasized this point, signalling its importance.
Why the Extension?
In a recent circular, SEBI clarified its decision: “Following feedback and representations from market participants, we’ve opted to push the freezing of folios provision’s effective date to January 1, 2024, from the originally proposed date of September 30, 2023.”
Ongoing Efforts by SEBI
To ensure investors are well-informed and compliant, SEBI has also directed Asset Management Companies (AMCs) and RTAs. They’ve been tasked with sending fortnightly reminders via email and SMS, urging those not in line with the nomination requirements to take necessary action.
The Bigger Picture
According to a PTI report, there’s a historical precedent of many mutual fund folios being opened without the requisite nomination. This move by SEBI is designed to safeguard investors’ assets and ensure their smooth transition to legal heirs if circumstances demand.
A Look Back
For context, it’s worth noting that SEBI had earlier set the deadline for existing mutual fund holders to September 30. The regulatory body mandated on June 15, 2022 that mutual fund holders provide nomination details or an opt-out declaration starting August 1, 2022. This timeline has seen multiple extensions.
Recent Update for Demat Account Holders
In related news, SEBI recently extended another deadline. Demat account holders now have until the end of December to provide their nomination choice or to formally declare their decision to opt-out.
This latest move by SEBI showcases its commitment to protecting investor interests while offering flexibility in the face of challenges. Mutual fund investors are encouraged to take note and act accordingly to ensure compliance and secure their investments.