Capital market regulator SEBI has scrapped its decision to freeze demat accounts and mutual fund folios for lack of nominations.

SEBI has also decided to remove the freeze on payment of corporate benefits and service of physical folios with immediate effect.

Based on representations received from market participants and for ease of compliance for existing investors, SEBI said non-submission of ‘choice of nomination’ will not result in freezing of demat accounts and mutual fund folios.

Security holders holding securities in physical form will be eligible for receipt of payment including dividends, interest, or redemption payments, as well as to lodge grievances or avail any service request from the RTA, even if ‘choice of nomination’ is not submitted by these security holders, it added.

Moreover, payments withheld presently by the listed companies and RTAs for want of nomination will be processed accordingly, it said.

By October, SEBI directed asset management companies and depositories to encourage existing investors to provide nominations through a pop-up notification on the web and mobile applications while logging into their MF accounts. The pop-up may be shown only to those clients whose MF folios and demat accounts without nomination.

SEBI, through a circular last December, extended the last date for submission of nominations for demat accounts and mutual fund folios to June 30, failing which the demat accounts and folios will be frozen for debits.

It also stopped crediting dividends and other payments to demat account holders without nomination in their demat account and asked the RTAs to register and solve investor complaints only if their accounts were nomination-compliant.

However, these directions have been rolled back for ease of doing business and due to investor complaints.