This is exactly what the situation that companies faced till the Nomination Clause (109 A) was incorporated in the Companies Act, giving them immunity to the legal wrangles between the legal heir and the nominee. The mutual fund fraternity is of the unanimous view that there is a need for such a clause. Speaking to The Financial Express, Zurich AMC (I) president SV Prasad said, "There is a need for such a clause to give MFs a statutory protection." At present, some of the private mutual funds are understood to offer the nomination facility by inserting a small clause saying it was subject to applicable laws.

Interestingly, the UTI Act has a statutory provision for nominees. Legal experts say even other public sector MFs like IDBI enjoy such protection through their Parental Act. Association of Mutual Funds of India has discussed the matter with Sebi and has requested that the nomination clause should be included in the Sebi MF Regulations.

However, it is not clear whether this requires a change in Sebi mutual fund regulations or the Indian Succession Act would have to to be amended.

Speaking to The Financial Express, Amfi chairman AP Kurian said, "Sebi's legal department is studying the matter and would suggest what needs to be done. We have also written to the government regarding amendment of the Indian Succession Act."