Transmission of Shares

Transmission of Shares — Complete Guide

We at www.iepfzone.com are receiving a lot of queries from investors from different parts of India to know how someone can transmit shares from the name of a deceased person to legal heir, nominee, or surviving joint holder, etc. So we thought of putting up the same on our website to help millions of such aggrieved investors.

Before we go through the process of transmission of shares, let us first understand the difference between Transfer of Shares and Transmission of Shares.

Transfer of Shares

In the stock market, we daily buy and sell shares either on Listed Exchanges i.e. NSE or BSE or do Off-Market Transactions in the Unlisted Market. So this process of selling shares from "Investor A" to "Investor B" is basically called as Transfer of Shares.

Transmission of Shares

The word 'transmission' means devolution of title to shares otherwise than by transfer — for example, devolution by death, succession, inheritance, bankruptcy, marriage, etc.

As we have understood the basic difference between the two terms — 1. Transmission and 2. Transfer — we will move forward and cover different scenarios to understand more about the transmission of shares:

Case 1: Transmission in case of Joint Holding + No Will + No Nominee

In case the deceased was holding a joint account, the surviving holder will request the DP (Depository Participant) by duly filling the "Transmission Form" along with a notarised Death Certificate of the deceased to transmit shares in his/her name. The surviving shareholder must have a Demat account either with the same DP or a different DP.

The DP, after receiving the above documents, examines the case and if found fit, will transfer the shares in the name of the heir and close the account of the deceased.

Case 2: Transmission in case of Single Holding + No Will + No Nominee

In case of death of the sole holder, the legal heir of the deceased must request the DP for transmission of shares in his/her name by duly filling the "Transmission Form" along with the following documents:

1. A copy of the notarised death certificate.
2. A copy of the Succession Certificate duly notarised, or an order of a court of competent jurisdiction where the deceased has not left a Will.
3. Copy of the Probate or Letter of Administration duly notarised.

However, if the legal heir expresses inability in producing the forms mentioned at "b" or "c" above due to any reason, and if the market value of the securities on the date of filing the application for transmission is less than ₹1 lakh, the DP can transfer shares on the basis of the below mentioned in addition to the death certificate above:

"Letter of Indemnity supported by a surety on non-judicial stamp paper by the applicant, Affidavit, and No Objection Certificate from all the legal heirs."

The DP, after receiving the above documents, examines the case and if found fit, will transfer the shares in the name of the heir and close the account of the deceased.

Case 3: Transmission in case of Single or Joint Holders + Nominee Available

In case of death of either the Single Holder or both Joint Holders, the nominee must request the DP by duly filling only the "Transmission Form" along with the Death Certificate to transfer shares in his/her name. The facility of Nominee, if given at the time of opening account with DP, can eliminate the cumbersome process of legal compliances.

Transmission form link: https://nsdl.co.in/downloadables/annex-o.pdf

Important Note

According to new SEBI guidelines, no transaction for the transfer of securities of a listed company, at a stock exchange or off-market transactions (Unlisted Shares) between buyers and sellers, can happen in physical certificate form. The shares need to be first converted into Demat form, then only they can be sold in the market. So, all shares held in physical after 01.04.2019 will become illiquid except for transmission and transposition. Transmission (transfer to heirs in case of death of the owner) would be possible in case of inheritance, but the new owners will have to dematerialise the shares if they wish to sell them further.

Therefore, in our case of Transmission of Shares, the ownership of the shares can be changed without the Demat account, but to sell those shares in the market after getting ownership they need to first convert them into Demat form.

So if any of you is facing any issue regarding selling shares of a deceased person, change of nomination, signature mismatch issue while conversion of shares, or any legal advice on different case scenarios, you can contact our team of experts by dropping an email at support@iepfzone.com or WhatsApp at +91 84480 78847 to Mr. Dinesh Gupta, Co-founder of IEPFZone.com. Our team will take you through the cumbersome process of such transmission without any hassles.