These changes, which impact the process of nominating beneficiaries, are expected to affect both account holders and nominees in various ways

The Securities and Exchange Board of India ( SEBI ) has introduced a set of reforms that significantly alter the nomination procedures for Demat and mutual fund accounts, aiming to enhance security and reduce the risk of fraud. 1. Increase in Number of Nominees:    Under the new rules, account holders can now nominate up to 10 individuals, compared to the previous cap of three. While this offers more flexibility, it could also lead to operational challenges. Each nominee’s share in the assets must be clearly defined, and their signatures will be required for any future transactions, potentially causing delays in the transfer or monetization of the assets. Transform Your Tax Audit Skills: In-Depth Analysis – Join our live session now, Click here 2. Unique Identifiers for Nominees:    SEBI now mandates that nominees provide key identification documents such as PAN, Aadhaar, or passport numbers, along with their photographs and signatures. This requirement is expected to reduce the chances of fraud by ensuring accurate identification of nominees. 3. Nominees Can Act on Behalf of Incapacitated Persons:    In a significant shift, nominees are now allowed to act on behalf of an incapacitated account holder. Previously, this was not permitted, which often led to legal complications and manipulation risks when online changes were made. This new provision aims to protect the interests of the incapacitated account holders and their beneficiaries. 4. Rule of Survivorship:    Joint account holders can now automatically become co-owners if one of them passes away, without requiring a mention of this in the initial agreement. This change reduces the likelihood of legal disputes but could still open the door to court intervention if a legal heir challenges the settlement process. 5. Optional Nomination for Joint Holders:    Another important amendment is that joint holders are no longer required to nominate a beneficiary. While this was previously compulsory, the rule was not always strictly enforced. However, if all joint holders pass away without a nomination, the absence of a clear nominee could lead to unclaimed funds, creating a new set of legal challenges. Transform Your Tax Audit Skills: In-Depth Analysis – Join our live session now, Click here These updates are seen as a proactive step toward improving transparency and security within the investment sector. However, they also introduce new operational complexities that account holders and nominees must navigate.