Sebi proposes simplified documentation process for nominees & legal heirs of deceased investors

New Delhi: Securities and Exchange Board of India (Sebi) on Thursday proposed simplifying the documentation process for the transmission of securities after the death of an investor, aiming to make it easier for nominees and legal heirs to claim financial assets.

In a consultation paper, the regulator suggested revising monetary thresholds for simplified documentation and introducing a straight-through processing (STP) mechanism for small-value claims to reduce paperwork and speed up settlements.

Sebi said the current limits for simplified documentation were set earlier and need revision in view of the rapid growth of the securities market and rising asset prices. Updating the thresholds would help ease the restitution of assets to the survivors of deceased investors.

Under the proposed framework, a verifiable death certificate may include the original document, a copy verified by the nominee, one attested by a notary public or gazetted officer, or a certificate carrying a QR code. A legal heirship certificate must be issued by a revenue authority not below the rank of a Tehsildar.

The regulator also proposed new limits for simplified processing. The STP mechanism would apply to claims of up to ₹10,000 for physical securities and ₹30,000 for dematerialised holdings. For simplified documentation, the threshold would be raised to ₹10 lakh for physical securities and ₹30 lakh for demat holdings. Listed companies may further enhance the ₹10 lakh limit for physical securities at their discretion.

Where a nomination exists, the process will be relatively simple. The nominee would need to submit a transmission request form, the latest client master list (CML) of the demat account attested by the depository participant, a verifiable death certificate and a valid identity proof. Sebi said intermediaries could then process claims faster, after which nominees may transfer securities to legal heirs without attracting income tax.

In cases where no nomination or will exists, Sebi has proposed a risk-based approach with documentation requirements depending on the claim value. Small claims under STP would require minimal documents, while higher-value claims would require additional papers such as indemnity bonds, no-objection certificates from other heirs or legal documents like a succession certificate or court decree.

The regulator also proposed standardising claim submission procedures, including providing standard forms online and offline, acknowledging receipt of claims and informing applicants about missing documents promptly. Transmission requests should be processed within 21 days after receiving complete documents. Sebi has invited public comments on the proposals until April 2.