NISM-Series-V-A: Mutual Fund Distributors · Investor Services

Nomination, Transmission and Account Changes in Mutual Fund Folios

Updated 11 October 2026 · Fact-checked

Nomination lets a unitholder name who receives units after death. Transmission is the process of moving units to the nominee, surviving holder or legal heir after a holder dies. Account changes cover bank mandate, address and contact updates, which need a written request and supporting proof. Answer by identifying who is claiming and what proof is needed.

Understand Nomination, Transmission and Account Changes

A mutual fund folio is a record of the units you hold. When something changes in your life, the folio must change too. You may move house, change your bank, or die. This topic covers how the fund house handles each case.

Nomination is a facility to name a person who will receive your units when you die. The nomination only authorises the nominee to receive the units on the holder's death. The nominee holds them for the benefit of the legal heirs, who keep their rights under the will or succession law. Nomination avoids long delays, because the fund house can transmit units to the nominee on proof of death and the nominee's identity.

Nomination is optional. If an investor opts out, the units on death are transmitted to the legal heirs on production of the required legal documents.

Transmission is the transfer of units from a deceased holder to the person entitled. In a single-holder folio, units go to the registered nominee. If there is no nominee, the legal heirs claim them, usually with a succession certificate, probate, or other legal documents. In a joint folio, units pass to the surviving holder(s) first. The nominee only comes into play when all holders have died.

The distinction between a nominee and a legal heir is a favourite exam trap. A nominee is a person named on the folio and gets quick access. A legal heir is someone entitled under a will or succession law. The nominee's right to receive units does not remove the legal heirs' rights. Nomination does not override a valid will or law of succession.

Account changes are updates to details such as bank mandate, address, phone number and email. These are made by a signed request, backed by proof. A change of bank mandate is sensitive because redemption money goes to that account. So the fund house asks for extra proof, such as a cancelled cheque leaflet bearing the investor's name, or a bank statement or passbook copy. Rules and forms are set by SEBI, AMFI and each fund house. Always check the exact document list in the workbook for your exam.

Key formulas to remember

Who can nominate: Individuals holding units on their own behalf, singly or jointly, can nominate; non-individuals cannot; Non-individuals (including HUF, companies, trusts, societies and partnership firms) and holders of a power of attorney cannot nominate. Nomination is also not allowed in a folio held on behalf of a minor.
Nominee eligibility: Nominee = generally an individual; a minor can be a nominee only if a guardian is named; A minor nominee needs a named guardian to act on the nominee's behalf. Non-resident Indians can be nominees, subject to applicable rules. A specified charitable or religious trust may be a nominee only as the rules permit. Other non-individuals cannot be nominees. Check the workbook.
Transmission order: Joint folio: surviving holder(s) → then nominee → then legal heirs; Single holder: nominee → legal heirs if no nominee.
Nominee's status: Nominee = authorised to receive the units, holding them for the legal heirs; not the absolute owner; The nominee receives the units on the holder's death and holds them for the benefit of the legal heirs, who keep their rights under the will or succession law.
Bank mandate change: Signed request + new bank proof (e.g. cancelled cheque with name or bank statement); Used because redemption proceeds go to the registered bank account.
Opting out of nomination: Opt-out must be a written declaration signed by all holders; SEBI requires nomination details or a signed opt-out declaration for new folios, so investors must either nominate or explicitly opt out. The opt-out is recorded. In a joint folio, every holder must sign the declaration. If an investor opts out, the units on death are transmitted to the legal heirs on production of the required legal documents.

How to solve Nomination, Transmission and Account Changes questions

Use the same sequence for any question about nomination, transmission or account changes.

1Read the question and decide the type: nomination, transmission, or account change.
2Identify the holding pattern: single holder, joint, or minor folio.
3Check whether the holder is alive. If dead, find who survives and whether a nominee is registered.
4Apply the order: surviving joint holder first, then nominee, then legal heirs.
5For account changes, identify the item (bank, address, phone) and recall the proof needed.
6Watch for words like always, only, automatically and absolute. They often make an option wrong.
7Pick the option that matches the rule stated in the workbook, not common practice.

Quickest way: Who gets the units, and what proof

When to use it: Use when the question names a folio type and asks who receives units or what is required.

Ask: is any holder still alive? If yes, units stay with the survivor(s).
If all holders are dead, look for a registered nominee.
No nominee means legal heirs with legal documents.
For any change request, think: signed request plus proof of the new detail.
Reject options that call the nominee the absolute owner.

Common mistakes in Nomination, Transmission and Account Changes

Thinking the nominee becomes the full owner of the units.
The word nominee sounds like heir, and nomination is quick in practice.
Fix: Remember the nominee is only authorised to receive the units and holds them for the benefit of the legal heirs, who keep their rights under succession law.
Giving units to the nominee in a joint folio when one holder dies.
Students forget the order of claim.
Fix: In a joint folio the surviving holder(s) get the units first. The nominee acts only after all holders die.
Allowing non-individuals such as companies or trusts to nominate.
Students assume every investor type can nominate.
Fix: Only individuals can nominate. Non-individuals (including HUF, companies, trusts, societies and partnership firms) and power of attorney holders cannot. A folio held on behalf of a minor also cannot have a nomination.
Assuming a nominee must always be named.
Forms push nomination, so it feels compulsory.
Fix: Investors can opt out, but for new folios SEBI requires either nomination details or a signed opt-out declaration, so they must nominate or explicitly opt out. The opt-out is recorded. If they opt out, units on death go to the legal heirs on production of the required legal documents.
Treating a phone call or plain email as enough for a bank mandate change.
Students think small changes are informal.
Fix: A bank change needs a signed request and supporting proof, since it controls where redemption money goes.
Mixing up nomination with a will.
Both deal with what happens after death.
Fix: A nomination does not override a valid will or the law of succession.

Worked examples

Example 1

Ravi and Meena hold units jointly in a folio with Ravi as first holder. Their son Arjun is the registered nominee. Ravi dies. To whom will the units be transmitted?

Show the solution

The folio is joint, and Meena is alive.
In a joint folio, units go to the surviving holder first.
The nominee, Arjun, is considered only when all holders have died.
So the units are transmitted to Meena on proof of Ravi's death.

Answer: The units are transmitted to Meena, the surviving joint holder, not to Arjun.

Example 2

Sunita held units in a single-holder folio and registered no nominee. She dies. How are the units handled?

Show the solution

There is only one holder and she has died.
No nominee is registered, so the nominee route is not available.
The claim goes to her legal heirs.
The legal heirs must furnish legal documents such as a succession certificate or probate, as the fund house requires, along with proof of death and identity.
The fund then transmits units to the person legally entitled.

Answer: The units go to Sunita's legal heirs after they submit the required legal documents and proof of death.

Exam tips

Expect scenario questions with joint folios. Always check who is still alive before looking at the nominee.
Look for trap words such as absolute owner, automatically and only. They usually signal a wrong option.
Remember who cannot nominate: non-individuals and power of attorney holders.
For bank mandate questions, pick the option with a signed request plus bank proof, not a verbal or informal request.
Know the difference between nominee and legal heir in one line so you can answer in seconds.

Practice questions from Investor Services

Nomination, Transmission and Account Changes: frequently asked questions

What is the difference between a nominee and a legal heir in a mutual fund?

A nominee is the person named in the folio who receives the units after the holder's death. A legal heir is someone entitled under a will or succession law. The nominee's receipt does not remove the legal heirs' claim on the value.

How are mutual fund units transmitted after death?

The claimant submits a request with proof of death and identity. In a joint folio, units go to the surviving holder(s) first. If all holders are dead, they go to the nominee, or to the legal heirs if there is no nominee, with legal documents.

How do I change the bank mandate in a mutual fund folio?

You submit a signed request to the fund house or its registrar, with proof of the new account such as a cancelled cheque bearing your name or a bank statement. The extra proof is needed because redemption money goes to this account.

Can a company or trust nominate in a mutual fund folio?

No. Only individuals can nominate. Non-individuals and holders of a power of attorney cannot make a nomination.