Amfi simplifies mutual fund transmission process after investor's death; revised SOP takes effect immediately

The Association of Mutual Funds in India (Amfi) on Friday simplified the process for transmission of mutual fund units following the death of an investor, after a directive from Sebi aimed at making claims easier for nominees and legal heirs.

The revised standard operating procedure (SOP), which takes immediate effect, seeks to reduce documentation-related hurdles during the transmission process by addressing common issues such as mismatches in the deceased investor's address, name and signature.

According to the Securities and Exchange Board of India (Sebi), as part of its ongoing investor-friendly initiatives, it advised Amfi to further simplify the standards governing the "Procedure to Claim Units/Proceeds upon death of a unit holder" to address operational challenges faced by the families of deceased investors. Amfi has accordingly amended the industry standards.

In a statement, the regulator said the changes are intended to facilitate ease of transmission while aligning industry practices with its objective of safeguarding investor interests.

Under the revised framework, Asset Management Companies (AMCs) may rely on the latest available address of the deceased unit holder, provided it is supported by relevant documents, in cases where the address recorded in mutual fund records differs from the address submitted by the claimant.

The move is expected to reduce delays arising from address discrepancies.

Sebi has also introduced a harmonised framework for resolving name and signature mismatches. AMCs may now adopt procedures similar to those prescribed for Registrars to an Issue and Share Transfer Agents (RTAs).

Under these guidelines, claimants can submit self-certified identity documents such as Aadhaar or Passport to resolve name mismatches. For signature discrepancies, AMCs may follow appropriate procedures depending on the nature of the mismatch, in line with the RTA framework.

In a separate statement, Amfi said the revised SOP was aimed at reducing operational hurdles and enabling nominees of deceased unit holders to claim mutual fund units or proceeds more smoothly.

The industry body noted that the changes come amid concerns over the difficulties faced by nominees and legal heirs in completing transmission formalities because of minor documentation inconsistencies.

“The updated SOP guidelines have been communicated to all member AMCs and take effect immediately,” Amfi said.

To ensure consistent implementation across the mutual fund industry, Sebi has advised Amfi to conduct training for all relevant entities involved in the transmission process.

Amfi said it will facilitate training initiatives through member AMCs to promote uniform application of the revised procedures and adherence to regulatory guidelines