Sebi rule for MFs: Nominate or opt out by Mar ’23

MUMBAI: If you’re a mutual fund investor and have not nominated anyone, you will not be able to withdraw your money from next fiscal, starting April 1, 2023. Markets regulator Sebi has directed all mutual fund houses to either get investors to nominate, or specify in a given format that they don’t want to nominate anyone for their investments.

Sebi also said that from August this year, new MF investors will have to opt for one of these two options. Investors subscribing to mutual fund units on or after August 1, 2022, shall have the choice of providing nomination in the format specified or opting out of nomination through a signed declaration form, Sebi said through a circular on Wednesday.

This has been done to “bring uniformity in practices across all constituents in the securities market”, it said. Investors will have to fill up a physical nomination form or do the same online using the official e-sign facility. All the fund houses should ensure “that adequate systems are in place for providing the e-sign facility and take all necessary steps to maintain confidentiality and safety of client records”, the circular said.

All the fund houses have been asked to set March 31, 2023 as the deadline “for nomination/opting out of nomination for all the existing individual unit holder(s) holding MF units either solely or jointly…failing which the folios shall be frozen for debits”, Sebi said.