If you hold shares in a demat account or units in a mutual fund folio, the people most affected by these rules are sole holders who have never added a nominee, NRIs who manage Indian securities from abroad, and families who will one day need to claim those assets. Under the SEBI circular dated 10 January 2025 you can now name up to 10 nominees, and a sole holder must either nominate or formally opt out. This is the securities rule, which is separate from how your bank account nomination works.
Quick Answer: Since 2025 you may name up to 10 nominees in a demat account or mutual fund folio, against the earlier limit of 3. You must do it yourself, not through a power of attorney holder. A nominee only holds the assets in trust for the legal heirs. The cap-at-four idea floated in 2026 is still only a proposal.
The exact screens differ between depositories and fund houses, but the steps are broadly the same. You always file the nomination yourself.
| Situation | Demat account | Mutual fund folio |
|---|---|---|
| Where you file | Depository participant or broker, with NSDL or CDSL | Registrar and transfer agent such as CAMS or KFin, or the AMC |
| Maximum nominees | Up to 10 | Up to 10 |
| Sole holder duty | Nominate or formally opt out | Nominate or formally opt out |
| Death of one joint holder | Assets pass to surviving joint holders, not the nominee | Assets pass to surviving joint holders, not the nominee |
| When nominees step in | Only after all holders have died | Only after all holders have died |
| Who can nominate | The investor only, never a power of attorney holder | The investor only, never a power of attorney holder |
For years an investor could name at most 3 nominees, and the rules around opting out and transmission were uneven across demat accounts and mutual funds. The SEBI circular dated 10 January 2025 overhauled this for securities. The headline change is the jump to a maximum of 10 nominees, which lets you split holdings across a larger family.
Three further points matter in practice. First, the nomination must be made by you, the investor; a power of attorney holder cannot do it on your behalf. Second, where you name more than one nominee, you should state the percentage share for each, and if you do not, the holding is divided equally among them. Third, the framework expects sole holders to act, by either nominating or filing a formal opt-out declaration. The reforms are now in force, having taken effect during 2025.
In March 2026 SEBI floated a separate consultation proposal to cap the number of nominees at 4, citing operational issues and very low use of multiple nominees. That is only a proposal open for public comment, not a notified rule. As of now the limit remains up to 10 nominees, so do not change your plans on the strength of the proposal alone.
A common and costly misunderstanding is that the nominee becomes the owner of the shares or units. They do not. A nominee is a trustee who receives the assets so that they can be passed to the rightful legal heirs under the applicable succession law or a valid will.
The Supreme Court settled this for company shares and securities in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023 INSC 1076). The Court held that nomination under the Companies Act does not create a third mode of succession and does not give the nominee absolute ownership. Vesting in the nominee means holding, not owning. So even after assets are transmitted to a nominee, the heirs can claim their rightful share. Keeping a clear, up-to-date will alongside your nominations avoids family disputes later.
When the account holder dies and there is no surviving joint holder, the nominees ask for the assets to be transmitted to them. The process is document-driven and broadly similar across providers.
If a genuine transmission request is stuck, escalate through the provider grievance route and then to SEBI SCORES. Our guide on a mutual fund nominee claim stuck walks through that escalation, and the demat shares missing complaint guide covers depository disputes.
Illustrative example. Kashvi Pathak holds a demat account and one mutual fund folio as a sole holder. She names four nominees: her spouse 40 percent, two children 25 percent each, and her mother 10 percent. Years later she dies without a surviving joint holder. The four nominees file transmission requests with her depository participant and the registrar, attach the death certificate and their KYC, and receive the assets in those proportions. Because a nominee only holds in trust, the family still settles final ownership in line with her will. This is a hypothetical example for illustration only.
You can name up to 10 nominees in a demat account or a mutual fund folio under the SEBI circular dated 10 January 2025, against the earlier limit of 3.
No. SEBI requires that the nomination be made by the investor. A power of attorney holder cannot make or change the nomination on your behalf.
If you name more than one nominee but do not specify shares, the assets are divided equally among them. To control the split, state a percentage for each so they add up to 100 percent.
A sole holder must either add a nominee or submit a formal opt-out declaration. The framework no longer lets a sole-holding account simply leave the field blank.
The securities pass to the surviving joint holder or holders, not to the nominee. Nominees come into the picture only when all the joint holders have died.
No. The nominee is a trustee who holds the assets for the legal heirs. The Supreme Court confirmed this in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023 INSC 1076).
SEBI floated a consultation proposal in March 2026 to cap nominees at 4, but that is only a proposal under public comment. The current limit remains up to 10 nominees.
This SEBI rule covers securities, that is demat accounts and mutual fund folios. Bank deposits follow separate banking rules. See our guide on bank account nomination rules 2025.