Securities and Exchange Board of India has issued a circular[1] regarding nomination for eligible trading and DEMAT accounts on 23rd July 2021 to all recognized stock exchanges, depositories, stop brokers through recognized stock exchanges (trading members) and depositary participates through depositories. Instructions regarding nomination by a holder of securities are provided in section 73 of the Companies Act, 2013. In paragraph 2 of The circular, it has stated Annexure A and Annexure B which provides for the format for nomination and opt-out of nomination through declaration form, respectively This will provide the investors opening new DEMAT account or trading accounts on or after first October cover 2021 with choice of providing nomination or opting out of the nomination. Annexure A and Annexure B will be applicable for any withdrawal of nomination or subsequent change.

Intermediaries that are depository participants and trading members upon receipt of the above formats will have to activate new DEMAT accounts and trading account from first October 2021. The declaration form and the nomination form has to be signed and wet signature of account holders. The Form does not require a witness. The witness’ signature will only be required if the account holder does not affix a wet signature but affixes a thumb impression. The account holder may also use an e-sign facility for signing the online declaration form and nomination form. Adequate and necessary steps are to be taken to maintain the safety and confidentiality of the client records that includes proper systems providing for e-sign facilities And the intermediaries need to ensure the same.

All existing eligible DEMAT accounts and trading account holders will be provided with the choice of nomination as per the options given in the circular on or before 31st March 2022. If the account holder fails to do so then the trading account will be frozen for grading and the DEMAT account will be frozen for debits.

Change board of India has directed the stock exchanges, depositories, and intermediaries to Take necessary actions to implement the provisions provided in the circular which shall include an amendment to relevant bylaws, regulations, business rules, and operational instructions. It has also been directed to bring the circular and its provision to the notice of their respective constituents and disseminate the same on their websites. The status of implementation of the provision needs to be communicated to the Securities and Exchange Board of India in the monthly development report. SEBI also directs to monitor the compliance of this circular.

Section 11 subsection one of the Securities and Exchange Board of India act, 1992 that is to be read with the provision of Securities and Exchange Board of India (depositories and participants) Regulations, 2018 and Securities and Exchange Board of India (Stock Broker) Regulations, 1992 To protect the interests off investors, to promote the development and regulate the securities markets. The circulars, as well as Annexures, are available on the SEBI website.

[1] SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601

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