SEBI - Nomination for Eligible Trading and Demat Accounts

Last updated: 24 July 2021

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Quick Summary

The Securities and Exchange Board of India (SEBI) has issued new guidelines regarding nominations for trading and demat accounts. Effective from October 1, 2021, investors opening new accounts will have the option to provide nomination details or opt-out. Existing account holders must make this choice by March 31, 2022, or their accounts may be frozen. Specific forms for nomination and opting out are provided, and these can be submitted with wet signatures or electronically via e-Sign.

Securities and Exchange Board of India

Circular

SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601

July 23, 2021

All Recognized Stock Exchanges

All Recognized Depositories

Stock Brokers (Trading Members) through Recognized Stock Exchanges Depository Participants through Depositories

Sir / Madam,

Nomination for Eligible Trading and Demat Accounts

1. Section 73 of Companies Act, 2013 provides for nomination by a holder of securities.

2. Investors opening new trading and or demat account(s) on or after October 01, 2021, shall have the choice 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

These forms at Annexure – A or B, would also be applicable for any subsequent change / withdrawal of nomination.

3. In this regard, Trading Members and Depository Participants (hereinafter, intermediaries), shall activate new Trading and Demat accounts from October 01,2021, only upon receipt of above formats.

4. The nomination and Declaration form shall be signed under wet signature of the account holder(s) and witness shall not be required. However, if the account holder(s) affixes thumb impression (instead of wet signature), then witness signature shall be required in the forms.

5. The on-line nomination and Declaration form may also be signed using e-Sign facility and in that case witness will not be required.

6. Intermediaries shall ensure that adequate systems are in place including for providing for eSign facility and also take all necessary steps to maintain confidentiality and safety of client records.

7. Further, 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 demat account shall be frozen for debits.

8. The Stock Exchanges, Depositories and intermediaries are directed to:

a. take necessary steps to implement the provisions of this circular, including making necessary amendment to the relevant bye-laws / business rules / regulations / operational instructions, as the case may be

b. bring the provisions of this circular to the notice of their respective constituents and also disseminate this circular on their websites

c. communicate to SEBI, the status of the implementation of the provisions of this circular in Monthly Development Report of the following month; and

d. monitor the compliance of this circular

9. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of SEBI (Stock Broker) Regulations, 1992 and SEBI (Depositories and Participants) Regulations, 2018, to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.

10. This circular is available on SEBI website at sebi.gov.in.

Yours faithfully,

Deepak Trivedi
Chief General Manager
Tel. no: 022-26449753
Email id: dtrivedi@sebi.gov.in

Find the attached file for the Nomination Form

FAQ :

The new rules apply to investors opening new trading and/or demat accounts on or after October 1, 2021.

Investors opening new accounts have the choice to provide nomination details or to opt out of nomination.

Existing eligible trading and demat account holders must provide their choice of nomination or opt-out by March 31, 2022.

If existing account holders fail to provide their nomination choice by March 31, 2022, their trading accounts will be frozen for trading, and their demat accounts will be frozen for debits.

The forms can be signed with a wet signature or electronically using the e-Sign facility. Witness signatures are not required for wet signatures but are needed if a thumb impression is used instead. Witness signatures are not required for e-Sign.