Why Appointment for Investments Matters, Especially if Held in Sole Name

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Why Appointment for Investments Matters Appointment ensures that investments are passed on to the candidate without much hassle. It is important to register the appointment when making an investment, especially if it is held in one name. It becomes very cumbersome for the legal heirs to access the investment otherwise.

Form

The appointment can be indicated at the time of investment. Alternatively, the investor can complete and submit the nomination form later. Most investments allow multiple nominations, in which the investor can indicate the percentage of the investment for each nominee.

Nomination

Only individual investors can make a nomination for their investment. A HUF karta or proxy cannot appoint. One person (family member, relative, friend) can be nominated as a candidate. In the case of insurance policies, if the agent is not a relative, the policyholder must prove the insurable interest of the agent.

Minor as candidate

A minor can be nominated after providing their date of birth and the name and address of their legal guardian.

Change of candidate

Investors should periodically review their nominations and register the change of nomination via:

  • Letter of indemnity backed by guarantee from an independent guarantor.
  • Affidavit made on stamped paper
  • NOC of all legal heirs

Points to note

  • Sebi has made it mandatory for mutual fund unitholders to either register the nominations or withdraw from the nomination effective August 1, 2022.
  • Nominees hold the proceeds of the investment in trust if the investment is challenged by the legal heirs, pending the final decision of the courts.
  • Non-resident Indians can become applicants subject to exchange control rules.

Content on this page is courtesy of the Center for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta
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