Explained: What Sebi’s New Nomination Rules Mean For Your Demat, Mutual Fund Accounts

The Securities and Exchange Board of India (Sebi) has announced that it has modified the norms for nomination in demat accounts and mutual fund folios.

In a circular issued on May 29, 2026, Sebi said these changes have been made following representations from various industry stakeholders who cited operational challenges in implementing the changes.

Through the revision of the nomination norms, Sebi intends to enhance the ease of investor onboarding while preventing the accumulation of unclaimed assets in the securities market. 

When Will Sebi’s Nomination Norms Change

Sebi’s nomination facility allows investors to designate individuals who can claim the assets in the event of their demise. The facility is an essential tool for succession planning and ensuring that the investor’s wealth is inherited by the rightful nominee without legal hassles. Sebi said that the changes it has made to nomination norms will come into effect from September 1, 2026. However, before the changes come into effect, investors must know the changes and how they will impact them. 

Sebi’s Modified Nomination Norms

As part of the revised nomination framework, Sebi has established clear rules regarding the choice of nomination. The market regulator said in the circular that investors will have to mandatorily provide a nomination form for all single accounts or folios opened on or after the implementation date unless the investor explicitly submits an ‘opt out’ declaration form to not have any nominees.

On the other hand, nomination will be completely optional for jointly held demat accounts and mutual fund folios. Additionally, investors who have jointly held accounts will have to get the consent of all holders for providing or changing a nominee, regardless of the account’s operational mode.

Sebi has also allowed investors to appoint up to three nominees. If an investor passes away, the nominees will have the flexibility to either continue maintaining the assets in the same account or open separate accounts for their respective shares.

The market regulator has also sought to simplify the mode of submitting nominations online and offline. For online submissions, the validation process can be completed using a Digital Signature Certificate, an Aadhaar-based e-sign, or a two-factor authentication process using a one-time password sent to the registered mobile number and email.

For physical or offline submissions, a wet signature from the accountholder is sufficient. The regulator has done away with the need to provide witness signatures. However, witnesses will still be needed if the investor uses a thumb impression instead of a wet signature.

Sebi also mentioned in the circular that if an investor does not specify a percentage share for multiple nominees, the assets will automatically be divided equally among them, with any odd lot asset going to the first named nominee.

How Will the New Norms Impact Investors

Sebi’s new nomination norms seek to significantly reduce administrative hurdles for investors. The regulator has also sought to make the onboarding process easier for investors. On the other hand, the circular brings clarity on rules regarding jointly-held demat accounts and folios, which in turn, can reduce future disputes. The rule regarding the equal distribution of assets in case a percentage is not specified is likely to help families whose assets are stuck in limbo due to a lack of a specified percentage.