SEBI Proposes Simpler Rules For Inheriting Shares And Mutual Funds

The Securities and Exchange Board of India (SEBI) wants to make it easier for families to claim stocks and mutual funds after an investor passes away. On Thursday, the regulator shared a new plan to reduce the complex paperwork that often frustrates legal heirs.

Currently, many families face long delays because different banks and brokers ask for different documents. SEBI’s goal is to create a single, fast process that works the same way everywhere.

Higher Limits For Easy Claims

One of the biggest changes is an increase in the "money limits" for simple claims related to the transmission of shares to nominees or legal heirs. Because stock prices have gone up over the years, the old limits are no longer enough.

"Fast Track" For Small Amounts

SEBI also wants to help people with very small investments. Sometimes, the cost of getting legal papers is more than the value of the shares themselves.

The regulator suggests a new "Straight-Through Processing" (STP) category. This would be for:

• ₹10,000 or less for physical shares.

• ₹30,000 or less for electronic (demat) shares.

For these small amounts, families would only need to show a death certificate and a simple ID proof. This would allow for almost instant approval without any extra legal costs.

What If There Is No Nominee?

If an investor did not name a nominee, the process is usually very hard. SEBI's new plan uses a "risk-based" approach to fix this:

- For Small Claims: You only need a basic form and a death certificate.

- For Medium Claims: You might need to give a "No Objection Certificate" (NOC) from other family members.

- For Large Claims: SEBI wants to remove the old rule that required a "probated will" from a court. Instead, families could use simpler papers, like a legal heirship certificate.

To make sure things move quickly, SEBI has set a strict deadline for the processing of claims. Once a family submits all the required paperwork, the broker must complete the transfer within 21 days.

If they reject a claim or take longer, they must give a written reason. Companies will also have to put all the forms on their websites and allow people to track their claims online.

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Investor Takeaway

This is a very positive move for retail investors. It ensures that their hard-earned wealth actually reaches their family without them having to fight a legal battle. For the stock market, this means less "frozen" money sitting in old accounts.

However, the broader takeaway remains the same: registering a nominee continues to be the simplest way to ensure a smooth transfer of investments. Even with the proposed rules, the presence of a nominee can make the transmission process faster and easier.

Sources:

The Hindu Business Line

The Economic Times

Moneycontrol