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Sebi Makes Investment Process By Minors Easy

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Sebi Makes Investment Process By Minors Easy
Yagnesh Kansara - 26 December 2019

Mumbai, December 26: In order to bring about uniform processes across Asset Management Companies (AMCs) in respect of investments made in the name of a minor through a guardian and to enable efficient transmission of units the Securities and Exchange Board of India (Sebi) has decided to simplify the process.

In case of investments are made in the name of a minor through a guardian, Sebi said, payment for investment by means of cheque, demand draft or any other mode shall be accepted from the bank account of the minor or from a joint account of the minor with the guardian only. For existing folios, the AMCs shall insist upon a change of pay-out bank mandate before redemption is processed.

Sebi in a circular issued on Thursday said, once the minor attaining the status of major, the minor in whose name the investment was made, shall be required to provide all the KYC details, updated bank account details including cancelled original cheque leaf of the new account. No further transactions shall be allowed till the status of the minor is changed to major, the circular said.

While releasing instructions for AMCs, Sebi said, AMCs shall build a system control at the account set up stage of Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP) on the basis of which, the standing instruction is suspended when the minor attains majority, till the status is changed to major.

With respect to the Process for transmission of Units and to improve the processing turnaround time for transmission requests Sebi asked AMCs to implement image based processing wherever the claimant is a nominee or a joint holder in the investor folio.

Sebi said, AMCs shall have a dedicated, Central Help Desk and a webpage carrying relevant information and instructions in order to provide assistance on the transmission process. AMCs shall adopt a common transmission request form (common fields) and NOC form. All such forms and formats shall be made available on the website of the AMCs, Registrar & Transfer Agents (RTAs) and industry body Association of Mutual Funds in India (Amfi).

Listing out further instructions for AMCs, Sebi said they shall implement a common set of document requirements for transmission of units to claimant who are nominees or joint holders in the investor account. AMCs shall implement a uniform process for treatment of unclaimed funds to be transferred to the claimant including the unclaimed dividends.

AMCs shall not accept requests for redemption from a claimant pending completion of the transmission of units in his / her favour.

Sebi said, the Stamp duty payable by the claimant with respect to the indemnity bond and affidavit, shall be in accordance with the stamp duty prescribed by law. AMCs and AMFI shall promote the importance of nomination as a part of its investor education and awareness programmes.

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