SEBI Revamps Nomination Norms for Demat Accounts and Mutual Fund Folios | Effective September 1, 2026

SEBI has issued Circular No. SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2026/12676 dated May 29, 2026, modifying the nomination framework for demat accounts and mutual fund folios. The circular comes into effect from September 1, 2026 and supersedes all earlier SEBI circulars on nomination, including circulars going back to 2002.

Background

SEBI had earlier issued a circular dated January 10, 2025 to revise and revamp nomination facilities in the Indian securities market with effect from March 1, 2025. Following stakeholder representations on operational challenges in implementation, SEBI undertook a public consultation and has now issued this consolidated circular with modified and simplified norms.

Default Choice of Nomination

For all single-holder accounts and folios opened on or after the date of implementation, nomination is mandatory unless the investor submits a signed opt-out declaration in the prescribed format. For jointly held demat accounts and mutual fund folios, nomination remains optional. In all cases where nomination is provided or changed, the consent of all joint holders is required, regardless of the mode of operation of the account.

Number of Nominees

An investor can nominate up to three persons. Where multiple nominees are designated, the nominees may, upon the demise of the investor, either continue in the same account or folio or open separate accounts or folios for their respective holdings.

Mode of Nomination

Investors may submit nomination either online or offline.

For online nomination, regulated entities must offer the facility as per the prescribed format. Validation is through Digital Signature Certificate, Aadhaar-based e-sign or any other e-sign recognised under the Information Technology Act 2000, or two-factor authentication where one factor is an OTP sent to the registered mobile number and email address.

For physical or offline nomination, the form must carry the wet signature of the account or folio holder. Witness signature is not required. However, where the holder affixes a thumb impression instead of a wet signature, the same must be witnessed by two persons and their name and address must be captured in the form.

Information to be Captured in the Nomination Form

Mandatory information includes the name of the nominee and the nature of relationship with the investor. Date of birth of the nominee is mandatory only if the nominee is a minor.

Optional information includes the nominee's mobile number, email address, percentage share, KYC or identity document details, and guardian details if the nominee is a minor. Where percentage share is not specified, assets are distributed equally among nominees. Any odd lot after equal division is transferred to the first nominee in the form.

Regulated entities must provide all optional fields in both online and offline nomination forms, irrespective of whether the investor chooses to fill them.

Opt-Out of Nomination

Investors who do not wish to nominate must either submit the declaration form for opt-out as per Annexure B of the circular or, in the online mode, actively choose the opt-out option after being shown the prescribed declaration message. The opt-out declaration informs the investor that absence of nomination may require legal or court documents for transmission of securities to heirs and that unclaimed assets may eventually be transferred to the Investor Education and Protection Fund Authority (IEPF).

Changes and Cancellation

Investors may provide, change, or cancel nominations any number of times. The prescribed forms in Annexures A and B apply for all subsequent changes and cancellations, including by existing investors. Regulated entities must provide an acknowledgement for every instance of nomination or change.

Obligations of Regulated Entities

In periodic statements of account or holding statements, regulated entities must print either the name of the nominee or a simple Yes or No indicating whether nomination has been made, as per the investor's preference recorded in the nomination form.

For all existing and newly opened accounts and folios without nomination, including opt-outs, Depository Participants and Mutual Fund RTAs must send bi-annual emails and SMS messages nudging investors to provide nomination and display a pop-up on the benefits of nomination at the first log-in of each day. These messages and pop-ups are not to be sent or displayed to investors who have already provided nomination.

These obligations apply mutatis mutandis to existing accounts and folios as well.

Implementation Timeline

This circular comes into effect from September 1, 2026. Depositories are required to make necessary amendments to their bye-laws, rules and regulations. Regulated entities must implement or upgrade their systems accordingly.

Supersession

This circular supersedes 18 earlier SEBI circulars on nomination issued between 2002 and 2025, consolidating the entire nomination framework into a single document.

The circular has been issued under Section 11(1) of the SEBI Act, 1992 and is available on the SEBI website at www.sebi.gov.in under Legal → Circulars.