APMI issues SOP to deal with transmission of units on death PMS investors

The centralized demise reporting mechanism now includes PMS, demat accounts, trading accounts and other SEBI-regulated entities under a common Standard Operating Procedure (SOP) framework, said the Association of Portfolio Managers in India (APMI). Earlier, a similar framework was introduced for mutual funds.

Under the updated SOP, once a nominee, joint holder or legal representative reports the demise of an investor to any one regulated entity like a PMS provider, broker, DP, AMC or RTA, the information will get updated centrally through the KRA system and shared across all linked intermediaries.

This effectively creates a ‘report once’ system for investor demise across the securities market. Earlier, families had to separately approach every AMC, broker, DP or PMS provider where investments were held, leading to delays, paperwork and unclaimed assets.

The framework covers:

• PMS accounts
• Demat accounts
• Trading accounts
• Custodians
• Brokers
• Depositories
• Investor Service Centres
• Mutual funds

A nominee or legal representative will have to submit:

• Death certificate
• PAN
• Officially valid document (OVD)

The recipient entity will verify the documents and upload the information in the KRA system. Once verified, all linked entities will get alerts through the centralized mechanism.

The updated SOP has introduced stricter controls for PMS accounts also.

In case of PMS-linked demat accounts, custodians and depositories will have to stop debit transactions immediately after receiving demise intimation through KRA feeds. However, ongoing transactions can be settled till the end of T-day before the account is frozen.

The framework has also added provisions for HUF accounts.

If the Karta of an HUF dies:

• The individual PAN of the Karta will be marked “Deactivated”
• The HUF PAN will remain “On Hold” until a new Karta is registered or dissolution documents are submitted

Another key addition is compliance with the Digital Personal Data Protection Act (DPDPA).

Regulated entities will now have to:

• Obtain explicit consent before sharing notifier details with KRAs
• Maintain consent logs
• Preserve records properly

The SOP also tries to address the issue of unclaimed assets.

If nominees or joint holders do not come forward for transmission, intermediaries may contact the notifier after a cooling-off period of 90 to 120 days so that investments do not remain unclaimed.

The centralized framework now also connects KRAs with:

• Stock exchanges
• Depositories
• DigiLocker
• CAMSKRA for a centralized death reporting dashboard

Timelines have also been standardized under the updated SOP.

• Regulated entities will have to upload demise information within T or T+1 working day
• KRAs will have to validate and update KYC status within T+1 working day
• Other intermediaries receiving alerts from KRAs will have to freeze accounts within T+1

The updated framework aims to reduce fraud, simplify transmission and reduce unclaimed assets across PMS, demat and trading accounts.

Click here to view the full SOP.

Like what you are reading?