MF Investing For Minors : Consider These
3 Things..!
by CAMS
Many mutual funds (MFs) have plans exclusively targeted
at investments for minors.
Here are guidelines for investing in mutual funds
on behalf of a minor.
1. Sole holder..!
The minor should be the first & the sole
holder in an account.
That is, there can not be a joint holder along
with a minor.
The date of birth of the minor needs 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 respective folio where the
investment is held on behalf of the minor shall either be a natural guardian
(that is father or / mother) or / a
court-appointed legal guardian, and this must be mentioned in the application
form.
Investors have to provide information on the
relationship / status of the guardian as father, mother or / legal guardian in
the application form and supporting documentary evidence will have to be
submitted evidencing the relationship (copy of birth certificate / passport) in the case of a natural guardian
& appropriate evidence for court-appointed guardian(s).
Details of documents, which are acceptable, are
normally provided in all the mutual fund application forms / Key Information
Memorandum. (KIM)
2. Change of status..!
Prior to a minor attaining majority, mutual funds
send advance intimation to the registered 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 & after the day the minor attains the age of majority and the guardian
will not be able to undertake any financial & 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.
Documents required include a service request form
/ letter duly filled & containing details; new bank mandate registration
form in case of a change in the bank account - proof in the form of a cancelled
cheque with the investor name appearing therein should be attached; signature
attestation of the investor (minor turned major) by the bank manager where the
account is held; and Know Your Customer (KYC) acknowledgement / KYC
verification details of the investor.
3. SIP registration..
Systematic Investment Plans (SIPs) can be
registered on behalf of a minor.
However, Mutual fund companies / AMCs will register a standing
instruction for SIP, Systematic Withdrawal Plan (SWP), and Systematic Transfer Plan (STP) in a minor’s folio only till the date of the
minor attaining majority, even if the SIP form contains an end period which is
beyond such date.
Fresh registrations would be allowed based on the
instructions of the investor.
Contributed by CAMS. The views expressed are general
practices in the Mutual Fund industry.
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