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Investors spend time selecting mutual funds, tracking returns and planning financial goals. However, many people forget to add or update nominees in their mutual fund folios and demat accounts.

A missing or outdated nomination creates difficulties for family members after an investor’s death. Legal heirs might have to submit additional declarations, indemnities or succession documents before receiving the investments.

SEBI introduced two important updates in 2026 to simplify this process. The modified nomination norms were issued on May 29, 2026, while the revised transmission framework was issued on July 23, 2026.

What Is Nomination?

Nomination allows an investor to identify a person who will submit a claim and receive the investments after the investor’s death, subject to applicable succession laws.

A nominee helps the AMC, RTA or depository participant identify the person authorised to start the transmission process. However, nomination does not replace a Will or complete estate planning.

Under SEBI’s revised framework, a nominee receives the investments as a trustee on behalf of the legal heirs. Therefore, investors should keep their nomination, Will and intended asset distribution aligned.

What Is Transmission?

Transmission is the process of transferring investments after the death of an investor. It is different from a normal sale, transfer or redemption.

Depending on the holding pattern, investments may be transmitted to surviving joint holders, nominees or legal heirs. The required documents depend on whether a nomination exists, how the investments are held and the total value of the claim.

Why Did SEBI Change the Rules?

Different AMCs, RTAs, listed companies and depository participants often followed different documentation practices. Families sometimes faced repeated document requests and long delays.

SEBI’s revised rules aim to standardise the process, reduce paperwork and prevent investments from becoming unclaimed assets. However, cases involving family disputes, competing claims or contested Wills still require an appropriate legal resolution.

New SEBI Nomination Rules for 2026

SEBI’s modified nomination norms will take effect from September 1, 2026. These rules apply to demat accounts and mutual fund folios.

For a new single-holder account or folio, the investor must either appoint a nominee or formally opt out of nomination. The investor cannot leave the nomination decision incomplete.

Nomination remains optional for jointly held accounts and folios. However, all joint holders must provide consent when adding or changing a nominee, regardless of the operating instructions for the account.

An investor is allowed to appoint up to three nominees. When multiple nominees are appointed, the investor should mention the percentage allocated to each nominee. If percentages are not provided, the investments will be divided equally. Any indivisible balance will go to the first nominee mentioned in the form.

Nomination may be submitted online or offline. Online nomination may use a Digital Signature Certificate, Aadhaar-based e-sign, another legally recognised e-sign facility or two-factor authentication.

For offline nomination with a normal signature, a witness is not required. When an investor uses a thumb impression, two witnesses must provide their signatures, names and addresses.

The nominee’s name and relationship with the investor are mandatory. The date of birth is also mandatory when the nominee is a minor. Contact details, identification information, allocation percentage and guardian details remain optional, but providing them may help the AMC, RTA or depository participant contact the nominee.

Investors are allowed to add, change or cancel nominations any number of times. The regulated entity must provide an acknowledgement whenever it receives a nomination or change request.

Investors without a registered nominee should receive email and SMS reminders twice a year. Online platforms must also display a message explaining the benefits of nomination.

SEBI’s New Transmission Framework for 2026

SEBI’s revised transmission framework covers listed securities and units issued by asset management companies after the death of a sole holder or all joint holders. The framework will apply 30 days after the circular dated July 23, 2026.

The new framework introduces Quick Transmission Processing, known as QTP, for low-value claims where no nominee is registered.

For physical securities and mutual fund units held in Statement of Account form, the QTP limit is ₹10,000. For securities held in demat form, the QTP limit is ₹30,000.

QTP is available only when the claimant is an immediate relative of the deceased investor. Eligible immediate relatives include parents, spouse, children and parents-in-law. The claimant must submit the prescribed request form, undertaking and proof of relationship.

SEBI has also revised the limits for simplified documentation. The limit is ₹10 lakh for physical securities and units held in Statement of Account form. The limit is ₹30 lakh for demat holdings.

For threshold calculation, physical securities are measured per listed entity. Mutual fund and SIF units held in Statement of Account form are measured per AMC. Demat securities are measured per beneficial owner.

Listed securities are valued using the previous closing price on a recognised stock exchange. Mutual fund units are valued using the latest available Net Asset Value.

Transmission When a Nominee Is Registered

When a valid nominee exists, the nominee must submit the prescribed transmission request form, a recent Client Master List of the nominee’s demat account, a verifiable death certificate and the original security certificate or Statement of Account, wherever applicable.

A verifiable death certificate includes an original certificate, an appropriately attested copy or a certificate containing a verifiable QR code.

The nominee receives the investments as a trustee for the legal heirs. Nomination makes the claim process easier, but final ownership is determined by applicable succession laws and valid estate documents.

Transmission When No Nominee Is Registered

When there is no nominee, the legal heirs or eligible claimants must submit the prescribed transmission request form, Client Master List, verifiable death certificate and the original security certificate or Statement of Account, wherever applicable.

For claims within the simplified documentation limit, claimants generally need a notarised indemnity bond and a notarised affidavit-cum-No Objection Certificate from the legal heirs. A qualifying family settlement deed may also be accepted.

For claims above the simplified documentation limit, a notarised affidavit-cum-NOC from the legal heirs is generally required along with one specified succession document. This document may be a Will with an indemnity bond, Legal Heirship Certificate with an indemnity bond, Succession Certificate, Letter of Administration or Court Decree.

When a Succession Certificate, Probate of Will, Letter of Administration or Court Decree is submitted, an NOC from non-claimant legal heirs is not required.

The exact requirements depend on the facts of the claim. Claimants should confirm the latest documents with the relevant AMC, RTA, listed company or depository participant before submitting the application.

Claims Involving Death Outside India

When an investor dies outside India, the processing entity must accept an appropriately certified copy of the foreign proof-of-death document.

Certification may come from a court, magistrate, judge or notary in the issuing country, an Indian embassy or consulate, an apostille, an authorised official of an overseas branch of an Indian scheduled commercial bank or an eligible foreign bank having a correspondent banking relationship with an Indian bank.

If the original document is not in English, the claimant must also provide a self-certified English translation.

Time Limit for Transmission Claims

The processing entity must process a transmission claim within 21 calendar days after receiving all required documents.

If the claim is delayed or rejected, the entity must communicate the reason in writing. The 21-day period starts only after the complete set of required documents has been received.

Rules for Surviving Joint Holders

When one joint holder dies, the investments are generally transmitted to the surviving joint holder or holders under the rule of survivorship, subject to the applicable legal framework.

In such cases, the processing entity should not request KYC documents, indemnities or undertakings from the surviving joint holder. A copy of the deceased holder’s death certificate is the primary document required.

What Should Investors Do Now?

Review the nomination status of every mutual fund folio and demat account. Confirm the nominee’s name, relationship, date of birth and contact details.

If you have appointed multiple nominees, record the intended percentage for each person. Review your nominations after marriage, divorce, childbirth, death of a nominee or any major family change.

Keep your folio numbers, demat details, insurance records and estate documents organised. Your family should know where these records are stored.

Most importantly, align your nominations with your Will. Nomination supports the transmission process, while a Will records how you want your assets to be distributed.

Frequently Asked Questions

Is nomination mandatory under the new SEBI rules?

For a new single-holder demat account or mutual fund folio, an investor must either register a nominee or formally opt out. Nomination remains optional for jointly held accounts and folios.

How many nominees are allowed?

An investor is allowed to appoint up to three nominees in a demat account or mutual fund folio.

When will the new nomination rules apply?

The modified nomination norms will take effect from September 1, 2026.

Does a nominee become the final owner?

Under SEBI’s revised transmission framework, the nominee receives the investments as a trustee for the legal heirs. Final ownership depends on succession laws and valid estate documents.

What happens when there is no nominee?

Legal heirs or eligible claimants may submit a transmission claim. The required documents depend on the value, holding mode and applicable claim category.

How long should a transmission claim take?

The processing entity must process the claim within 21 calendar days after receiving all required documents.

Final Words

SEBI’s new nomination and transmission rules aim to reduce delays, standardise documentation and make investment claims easier for families.

Investors should review their nominations, maintain updated records and align nominations with a valid Will. Completing these steps now may protect your family from unnecessary paperwork and uncertainty later.

Disclaimer

This article is for investor education only and is based on SEBI circulars dated May 29, 2026 and July 23, 2026. Rules and documentation may change or vary according to the facts of each claim. Confirm the latest requirements with the relevant AMC, RTA, depository participant or listed company. Seek qualified legal or tax guidance where required.

Mutual fund investments are subject to market risks. Read all scheme-related documents carefully.

Ambition Finserve Private Limited

AMFI Registered Mutual Fund Distributor

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