Guidelines – Mutual Fund investments in the name of a minorKapil
One can invest in a mutual fund scheme on behalf of a minor. In fact, many funds have plans exclusively targeted at investments for minors. Here are the details.
What are the guidelines regarding investments in the name of a minor?
The minor should be the first and the sole holder in an account. That is, there cannot be a joint holder along with a minor. Joint holder details are not considered
The date of birth of the minor would have to be provided in the application form along with a photocopy of supporting documents such as birth certificate/passport/school leaving certificate.
The guardian in the folio on behalf of the minor should either be a natural guardian (i.e. father or mother) or a court appointed legal guardian and this must be mentioned in the space provided in the application form.
Appropriate documentary evidence would have to be provided in case the guardian is a court-appointed guardian.
Details of documents to be provided are available along with the application form/Key Information Memorandum.
In case the documents and details as mentioned above are not provided, the application will not be processed.
What is the procedure to change the status when a minor becomes a major?
When the units are held on behalf of a minor, the ownership of the units rests with the minor.
A guardian operates the account until the minor attains the age of majority.
When a minor turns major, mutual funds will seek relevant documents and follow the guidelines as enumerated below.
Prior to minor attaining majority, mutual funds send an intimation to the registered correspondence address advising the guardian and minor to submit an application form along with the prescribed documents to change the status of the investor to “major”.
The account will not be operable by the guardian on and after the day the minor attains the age of majority and the guardian will not be able to undertake any financial and non-financial transactions in the folio after the date of the minor attaining majority.
Once the status is changed on receipt of the prescribed documents, the investor who is a major may transact in the folio.
The standard documents to change the account status from minor to major are given below:
A service request form/letter duly filled and containing details such as the fund, name of the major (investor), folio number. A form for the same is available on mutual fund and registrar Web sites. This contains the requirements to be attached.
New bank mandate registration form if there is a change in the bank account of the investor. The proof in the form of a cancelled cheque with the investor name and account number appearing therein should be attached.
Signature attestation of the investor (major) by the bank manager
KYC acknowledgement of the investor — i.e. the minor who has turned major
Age proof of the investor
(Source Business Line: Contributed by CAMS Viveka – the Investor Education initiative of CAMS.)