Sebi Makes Investment Process By Minors Easy

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.