According to a current SEBI (Securities and Exchange of India) rule for a distributor–“the nominee of individual distributor will receive trail brokerage/commission on business done before the demise of the distributor holding ARN card. The nominee will not be entitled for any brokerage/commission on SIP (Systematic Investment Plan) instalments post demise of Distributor. In case of any payment made between the period of actual date of demise and date of intimation of demise, the amount paid shall be recoverable from the nominee/individual Distributor.”
Therefore, a distributor’s nominee who does not have the ARN (AMFI Registration Number) and NISM (National Institute of Securities Markets) certification cannot receive trail commission on the business acquired after the death of the distributor.
According to media reports, AMFI Committee on Registration of Certified Distributors requested a modification in this rule. The Committee has written a letter to SEBI, requesting the regulator to change the rule and allow the further trail commission to be paid to the nominee after the demise of the distributor till the tenure of the investments even if the nominee is not an ARN holder. The nominee should also be paid the due upfront commission and trail commissions on SIP investments till the time the investment is held.
According to Pankaaj Maalde, head-financial planning, ApnaPaisa.com, in case of insurance business, the insurance agent’s nominee receives the commissions till the end of the tenure and no certification is needed.
