Mutual Funds

Nomination – Your right and responsibility

| Updated on March 09, 2013

Your family’s comfort is of paramount importance to you. You have been diligently investing in Mutual Funds to take care of your family’s needs now and in the future. But have you done the right paperwork to ensure that your family has access to your investments with ease, in case of any unfortunate event?

Nomination is both your right and responsibility. It ensures that your investments reach your nominees easily.

An investor can nominate a person i.e. a nominee to whom his/her Mutual Fund Units will be transferred on his/her demise.

Registering a nomination

A nomination can be registered at the time of purchasing units. The application form has provision to fill in the nomination. In fact, in current application forms, investors are asked to specifically indicate if they do not wish to nominate. If an investor has not registered a nomination at the time of application, he/she may register it later with relevant particulars of the nominee. Forms are available at the mutual fund/registrar Web sites.

Multiple nominations are possible in a folio and a minor can be a nominee. An investor may make up to three nominations for a folio and even specify the percentage of the units that will go to the nominees. A nomination can be changed at any time and even cancelled. Standard forms for the purpose are available at the fund Web sites.

Who is eligible

Nominations can be made only by individuals applying for/holding units on their own behalf singly or jointly. Non-individuals, including societies, trusts, body corporates, partnership firms, Karta of HUF, holders of power of attorney (POA) cannot make a nomination.

A nomination can be made in favour of individuals, including minors, the Central government, State government, a local authority, any person designated by virtue of his office or a religious or charitable trust. A non-resident Indian can be a nominee subject to the exchange control regulations in force from time to time.

Documents required

On the demise of the investor, if a nominee is registered in the folios, the following would need to be submitted to effect the transmission of units in favour of the nominee:

A letter from the nominee claimant to the fund or Registrar requesting transmission of units. A format of the letter is available at the registrar and mutual fund Web sites

Death Certificate in original or a photocopy duly notarised or attested by a gazetted officer or a bank manager

Bank Account details of the new first unit holder, i.e. the nominee, along with attestation by the bank branch manager or a cancelled cheque bearing the account details and account holder’s name.

KYC acknowledgement of the nominee(s)

If the transmission amount is Rs 1 lakh or more, an indemnity bond is to be signed and executed by the nominee. The format is generally available for investors to download from the Asset Management Companies Web sites.

The documents required to effect the transmission are prescribed by the respective AMC and they may marginally vary.

The benefit

Registering a nomination facilitates easy transfer of funds to the nominee(s) on the demise of the investor. In the absence of the nominee, a claimant would have to produce a host of documents, such as a will, legal heirship certificate, no-objection certificate from the other legal heirs, letter of administration/succession certificate, indemnity bond, etc., to get the units transferred. Nominate today. Have peace of mind.

Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. Views expressed are general practices in the MF industry and may vary on a case to case basis.

Published on March 09, 2013

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