When a shareholder passes away or becomes legally incapacitated, their shareholding must be lawfully passed to their heir or nominee. This process, known as the Shares Transmission Procedure, is governed by Indian corporate laws and must be carefully followed to avoid complications. At Share Claimers, we specialize in helping legal heirs and stakeholders navigate this legal journey efficiently and without hassle.
What is the Shares Transmission Procedure?
The Shares Transmission Procedure refers to the process of transferring ownership of shares by operation of law — typically after the death, insolvency, or lunacy of a shareholder. Unlike a regular transfer, transmission does not require any consideration or sale agreement. It ensures that the legal heir or nominee assumes ownership rights over the deceased or incapacitated shareholder’s holdings.
This procedure is vital to protect shareholder interests and maintain the company’s records correctly.
Legal Framework Governing Shares Transmission Procedure
In India, the Companies Act, 2013, governs the Shares Transmission Procedure, particularly under Section 56. The process is legally mandated and does not require a transfer deed like Form SH-4. Additionally, no stamp duty is applicable on transmission.
However, each company may have specific rules in their Articles of Association (AOA), so it’s essential to refer to them during the process.
When Does Shares Transmission Occur?
The Shares Transmission Procedure is applicable under the following conditions:
- Death of the shareholder
- Insolvency or bankruptcy
- Mental incapacity
- Inheritance through will or legal succession
In all cases, the shares are transmitted based on legal evidence, and the successor is recorded in the Register of Members.
Documents Required for Shares Transmission Procedure
To begin the Shares Transmission Procedure, the following documents are usually required:
- Original or notarized death certificate (in case of death)
- Succession certificate, probate of will, or letter of administration
- PAN card and address proof of the legal heir or nominee
- Share certificates (for physical shares) or client master report (for demat shares)
- A formal application for transmission addressed to the company
- Indemnity bond and affidavit as required by the company’s AOA
It’s advisable to confirm the specific document checklist with the company or registrar.
Step-by-Step Shares Transmission Procedure
- Notification to Company:
The legal heir, nominee, or representative must notify the company about the shareholder’s demise or condition triggering transmission. - Submission of Required Documents:
Submit the necessary legal documents, including death certificate and succession documents. - Board Review and Approval:
The Board of Directors will verify the application and approve the transmission based on the documents. - Entry in Register of Members:
Once approved, the name of the legal heir or nominee is entered into the company’s Register of Members. - Issue of Share Certificate (if applicable):
If the shares are held in physical form, a new certificate may be issued in the new shareholder’s name.
This structured process ensures legal compliance and proper transfer of ownership.
Demat Shares Transmission Procedure
For dematerialized shares, the Share Transmission Procedures is slightly different and is handled through the Depository Participant (DP).
Steps include:
- Fill out the Transmission Request Form (TRF) with the DP
- Submit a death certificate, KYC documents, and relationship proof
- DP verifies the documents and processes the transmission
- Shares are transmitted into the demat account of the nominee or legal heir
This is usually a faster and smoother process compared to physical share transmission.
Role of Share Claimers in Shares Transmission Procedure
At Share Claimers, we provide complete legal support for the Shares Transmission Procedures including:
- Drafting and reviewing the necessary legal documents
- Coordinating with the company’s registrar or RTA
- Court procedure assistance for succession or probate if required
- Ensuring complete compliance with company and legal regulations
Our expertise ensures you don’t miss a single legal step during the transmission process.
Important Legal Points to Remember
- If a nominee has been registered, the shares can be transmitted without a succession certificate.
- In the absence of a nominee, the legal heir must obtain a probate or succession certificate.
- Companies may have different internal policies, always check the AOA.
- Stamp duty is not applicable in the case of transmission.
- For physical shares, always retain original share certificates.
Being aware of these factors helps speed up the process and avoid legal complications.
Conclusion
The Shares Transmission Procedure is an essential legal step that ensures rightful ownership is passed on to heirs or nominees. Whether the shares are physical or dematerialized, following the correct legal protocol is critical. At Share Claimers, our goal is to simplify this complex process and help clients comply with legal standards with ease.
If you need expert help in navigating the Shares Transmission Procedure, reach out to Share Claimers today for seamless support and legal clarity.
