SEBI issued the circular on May 29, 2026 (Circular No. SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2026/12676) comprehensively overhauling the nomination framework for Demat Accounts and Mutual Fund Folios. The modified nomination norms come into effect from September 1, 2026, while supersession of earlier nomination-related circulars is effective from the date of this circular — i.e., May 29, 2026. The changes make nomination mandatory for new single accounts/folios (with an opt-out option), simplify the process significantly, remove witness requirements for physical nominations, allow up to 3 nominees, and impose new obligations on DPs and MF RTAs to proactively nudge investors without nominations. This is among the most significant investor protection reforms in the securities market in recent years.
💡 Circular at a Glance
🏛️ Section 1 — Background: Why Did SEBI Need to Revamp Nomination Again?
India has a significant and growing problem of unclaimed financial assets. According to data published by the IEPF Authority and SEBI, billions of rupees in unclaimed shares, mutual fund units, and dividends sit idle in the securities market — often because investors passed away without having registered a nominee, leaving their legal heirs scrambling for documentation, probate orders, and court attestations.
SEBI had been steadily tightening nomination norms since 2021 — with the landmark January 10, 2025 circular seeking to completely revamp the framework. However, after that circular was implemented from March 1, 2025, SEBI received representations from AMCs, DPs, and RTAs raising operational challenges — particularly around complex witness requirements, unclear online validation procedures, inconsistent formats across regulated entities, and ambiguity about joint account nomination consent. The May 29, 2026 circular is SEBI's comprehensive response — incorporating public consultation feedback and stakeholder representations to produce a simplified, unified, and workable framework.
📌 What Changed Since January 10, 2025?
The January 10, 2025 circular attempted a comprehensive revamp but created operational confusion — particularly around witness requirements, authentication methods, and mandatory vs optional data capture. The May 29, 2026 circular: (1) removes witness requirement for physical nominations with wet signature; (2) clarifies online validation methods; (3) standardises the nomination form in a single unified Annexure-A; (4) explicitly separates mandatory from optional information; (5) introduces a standardised opt-out declaration form (Annexure-B); and (6) extends applicability to existing accounts mutatis mutandis. Most importantly, it supersedes all 18 previous circulars — creating a single reference document.
📋 Section 2 — Summary of All Key Changes: Before vs After
📌 Section 3 — Detailed Breakdown of Each Provision
Para 4 — Default Choice of Nomination
4.1 — Nomination is now MANDATORY for new single accounts/folios
For every single-held demat account or mutual fund folio opened on or after September 1, 2026, the investor must mandatorily provide a nomination. The only way to skip nomination is to formally opt-out using the prescribed Annexure-B declaration form — silence is no longer treated as opting out.
❌ What Was Possible Before
Investors could simply skip the nomination field during account opening without any formal declaration. Many investors left the field blank, creating millions of accounts with no nomination — a major driver of unclaimed assets.
✅ New Position (from Sep 1, 2026)
Account opening cannot be completed without the investor either (a) providing nomination details per Annexure-A, OR (b) formally opting out using Annexure-B. There is no third option.
4.2 — Nomination Optional for Joint Accounts/Folios
For jointly held demat accounts or mutual fund folios, nomination remains optional — recognising that joint holders typically serve a similar protective function as nominees. However, if a joint account holder wishes to provide nomination, they may do so.
4.3 — Joint Accounts: All Holders Must Consent for Nomination/Change
In joint accounts, the consent of ALL joint-holders is required to add, change, or remove a nominee — regardless of the mode of operation (even if the account is "either or survivor" operated by a single holder). This prevents unilateral nomination changes.
Para 5 — Number of Nominees
Para 6 — Mode of Providing Nomination
Investors have the choice of submitting nomination either online or offline (physical). Regulated entities must make both options available using the standardised Annexure-A format.
🖥️ Online Nomination — 3 Valid Methods
- Digital Signature Certificate (DSC)
- Aadhaar-based e-sign or any other e-sign facility recognised under the Information Technology Act, 2000
- Two Factor Authentication (2FA) — one factor must be OTP sent to the investor's registered mobile number AND email address
📝 Physical / Offline Nomination — Simplified
- Wet signature of the holder — witness NOT required
- If thumb impression is used instead of wet signature: two witnesses required, with name and address captured in the form
- No additional authentication needed for wet signature submissions
⚠️ Key Change — Witness No Longer Required for Standard Physical Nomination
One of the biggest operational pain points under the previous framework was the requirement for a witness signature on physical nomination forms — making it cumbersome for elderly or rural investors. The new circular removes witness requirement entirely for physical nominations signed with wet signature. Witnesses are only needed when the investor uses a thumb impression instead of a signature.
Para 7 — Information to Be Captured in Nomination Form
The circular clearly separates mandatory from optional information — a crucial clarification that removes the overload of information previously required:
📌 Percentage Share — What Happens If Not Specified?
If an investor adds 3 nominees but doesn't specify the percentage share for each, the assets in the account/folio are divided equally among all nominees. For any odd lot that cannot be equally divided, the entire odd lot is transferred to the first nominee mentioned in the form.
Para 8 — Opting Out of Nomination
If an investor genuinely does not wish to nominate anyone, they must formally opt-out using the standardised Annexure-B Declaration Form. The opt-out process has two routes:
What does Annexure-B tell the investor? The opt-out declaration form explicitly informs the investor that: (i) nomination enables faster transmission to legal heirs; (ii) without nomination, legal heirs may need court-issued documents causing delays; and (iii) if no claim is made for a prolonged period after demise, holdings may be treated as unclaimed and transferred to IEPF.
Para 9 — Changes and Cancellation of Nomination
- Investors can provide, change, or cancel nominations any number of times — no limit
- Annexure-A and Annexure-B forms apply equally to subsequent changes/cancellations and to existing investors
- Regulated entities must provide a mandatory acknowledgement to the investor for every instance of nomination or subsequent change
- For joint accounts, all joint-holders' consent is required for any change or cancellation as well
Para 10 — Obligations of Regulated Entities (DPs / MF RTAs)
10.1 — Holding Statements Must Reflect Nomination Status
In every periodic statement of account or holding statement sent to an investor, regulated entities must print either:
- The name(s) of the nominee(s), OR
- A simple Yes / No indicator of whether nomination has been made
The choice of which to print is made by the investor in the nomination form itself — the investor controls what appears on their statement.
10.2 — Proactive Nudging of Investors Without Nomination
For existing and newly opened accounts/folios that do not have a nomination (including opt-outs), DPs and MF RTAs must:
⚠️ Important — Pop-ups ONLY for Those Without Nomination
The bi-annual messages and daily pop-ups must NOT be sent or displayed to investors who have already provided a nomination. This prevents harassment of investors who have already complied and ensures the nudge mechanism is targeted and relevant.
Para 11 — Applicability to Existing Accounts
All the provisions of this circular apply mutatis mutandis to existing accounts and folios as well. This means: existing investors without nomination will be nudged; existing investors can use Annexure-A to add nominees and Annexure-B to formally opt out; and the standardised forms apply to all changes going forward.
Para 15 — 18 Superseded Circulars
This circular supersedes all previous nomination-related circulars with immediate effect from May 29, 2026. A total of 18 circulars — dating back to July 2, 2002 — are superseded. Key ones include:
📅 Section 4 — Key Timelines
👥 Section 5 — Who Is Affected and What Must They Do?
❓ Frequently Asked Questions
Q1. I am opening a new demat account from September 1, 2026. Is nomination compulsory?
Yes, if it is a single-held account. You must either (a) provide nominee details using Annexure-A, OR (b) formally opt-out using Annexure-B. Simply skipping the nomination field is no longer permitted. Your account opening will not proceed without completing one of these two steps. For joint accounts, nomination is optional.
Q2. I have an existing demat account without nomination. Will it be frozen or restricted?
No — existing accounts without nomination will not be frozen or restricted. The circular does not impose any penalty or restriction on existing accounts. However, from September 1, 2026, your DP/RTA must send you bi-annual SMS and email reminders to add nomination, and must display a pop-up on your first daily login. These nudges will continue for all accounts/folios without nomination — including opt-outs. Per the proviso to Para 10.2, the circular excludes only investors who have provided nomination from receiving these reminders. The only way to stop nudges is to provide a nomination via Annexure-A.
Q3. I want to nominate my minor child. What details are mandatory vs optional?
When nominating a minor, the mandatory details are: (1) name of the minor nominee; (2) relationship with the investor; and (3) date of birth of the minor (mandatory for minors). Optionally, you may also provide: the guardian's name and contact details, the minor's KYC identifier (Aadhaar last 4 digits, PAN, etc.), mobile number, and email. The guardian details are recommended because they enable the DP/RTA to contact the guardian upon your demise — but they are technically optional under the new framework.
Q4. I have a joint demat account. My co-holder refuses to consent to adding a nominee. What happens?
Per Para 4.3 of the circular, the consent of all joint-holders is required for providing or changing a nominee in a jointly held account, regardless of the mode of operations (even if the account operates on "either or survivor" basis). If any joint-holder refuses to consent, a nomination cannot be added or changed. Nomination is optional for joint accounts — so this situation, while frustrating, does not create a compliance breach. You may wish to discuss the importance of nomination with your co-holder, given the legal complications it can create for your legal heirs.
Q5. I have 3 nominees but haven't specified any percentage split. How will my assets be divided?
If no percentage share is specified, the assets are divided equally among all nominees — so each gets one-third. For odd lots that cannot be equally divided (e.g., fractional units), the entire odd lot is transferred to the first nominee mentioned in the form. To avoid any ambiguity, it is advisable to specify the percentage share of each nominee explicitly — but this remains optional.
Q6. I submitted my nomination physically a year ago with a witness signature. Is my old nomination still valid?
Yes. The circular states that Annexure-A and Annexure-B forms "would also be applicable for any subsequent change/cancellation of nomination and also for existing investors." Your existing nomination (even with a witness signature) remains valid. However, when you make any future changes or updates to your nomination, you will use the new standardised Annexure-A form, and a witness will no longer be required if you sign with a wet signature.
Q7. I opted out of nomination earlier. Will I still get pop-ups and reminders?
Yes. Para 10.2 expressly includes opt-outs within the category of accounts/folios "without nomination (including opt-outs)" that are subject to bi-annual nudges and daily first-login pop-ups. Therefore, even if you have formally opted out via Annexure-B, DPs and MF RTAs may still send you bi-annual emails/SMS and show pop-ups on your first daily login. The proviso to Para 10.2 excludes only investors who have provided a nomination from receiving these reminders. The only way to stop nudges under this framework is to add a nominee to your account/folio using Annexure-A.
Q8. What happens to my holdings if I die without nomination and no one claims them?
This is explicitly stated in the Annexure-B opt-out declaration form — your legal heirs will need to submit additional legal or court-issued documents (succession certificate, probate, legal heir certificate, etc.) to claim the assets, which significantly delays the transmission process. If no claim is made for a prolonged period, the holdings may be classified as unclaimed assets and transferred to the Investor Education and Protection Fund Authority (IEPF) under the applicable regulatory framework. This is precisely why SEBI has made nomination mandatory for new accounts — to prevent this from happening.
📝 Bottom Line
SEBI's May 29, 2026 circular is the most comprehensive and investor-friendly nomination framework ever issued for the Indian securities market. By making nomination mandatory for new single accounts (while preserving the opt-out right), removing the witness requirement for physical nominations, standardising the process across all regulated entities, and introducing proactive nudging obligations on DPs and RTAs, SEBI has addressed the root causes of unclaimed asset accumulation. For investors: act now — add nominees to your demat accounts and mutual fund folios before September 1, 2026 to ensure your family faces minimal hassle in accessing your investments. For regulated entities: system upgrades, bye-law amendments, and deployment of the Annexure-A/B framework must be completed before the September 1, 2026 effective date — the clock is already running.
Source: SEBI Circular No. SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2026/12676 dated May 29, 2026, issued by S. Manjesh Roy, General Manager, SEBI Investor Awareness Division-3. Available at sebi.gov.in under "Legal → Circulars." This article is for informational purposes only and does not constitute legal or investment advice.
