SEBI has revised nomination rules for demat accounts and mutual fund folios, effective September 1, 2026. Investors may now designate up to ten nominees per account, compared to the earlier limit of three. Each nominee must be assigned a specific percentage share of assets. Existing investors must update their nominations or submit a declaration of non-nomination by the deadline. Failure to comply may result in account freezing for debits, affecting trading and redemption transactions.

Nomination is an investor-protection mechanism that allows account holders to designate individuals who will receive securities or mutual fund units upon the holder's death, bypassing prolonged legal succession procedures. SEBI's revised framework, effective September 1, 2026, significantly expands this mechanism in two directions.

First, the nominee ceiling rises from three to ten per account, enabling investors with larger families or complex succession plans to distribute assets more precisely. Second, each nominee must be assigned a defined percentage share, eliminating ambiguity that previously arose when multiple nominees existed without proportional allocation.

The rule applies across depository participants (DPs) registered under SEBI — NSDL and CDSL — and to mutual fund RTAs (Registrar and Transfer Agents) and AMCs.

For existing accounts, SEBI has set a compliance deadline of September 1, 2026. Investors who neither update nominations nor file a formal declaration of non-nomination will face debit freezes — meaning they cannot sell securities or redeem mutual fund units. This is a strong enforcement mechanism designed to ensure universal participation rather than passive non-compliance.

The broader regulatory intent connects to SEBI's investor protection mandate under Section 11 of the SEBI Act, 1992, which requires the regulator to protect investor interests and promote orderly securities market development. Streamlined succession reduces unclaimed asset accumulation — a long-standing problem in Indian capital markets tracked by IEPF (Investor Education and Protection Fund).