Transfer of Shares in case of Death of the Holder – Complete Guide
Transfer of Shares in case of Death of the Holder, This article tells you about the requirements under the companies act, when any share holder or a member has died than how the transmission of the shares would be made to the legal heirs or the nominees of such dead person and what are the documents required for it. It also tells you about the consequences for not following the same. Now you can scroll down below n check more details regarding “Transfer of Shares in case of Death of the Holder”
The word transmission refers to the transfer of the shares where the shares have to be compulsorily transferred to such person as may be required. Section 56(2) says that “Nothing in sub section (1) shall prejudice the the power of the company to register, on receipt of an intimation of transmission of any right to securities by operation of law from any person to whom such rights has been transmitted.”
Documents required for transmission:
The shares may be held in any of the form such as physical form or the demat form. We will clarify for each as under:
There also two cases are there – When there is nominee mentioned or where there is no nominee mentioned. Each is explained here separately.
A. Where there is nomination – If there is already nomination by the deceased person than the following documents are to be sent tot the depository participant.
1. Transmission request form (TRF)
2. Death Certificate (Notarized)
B. Where there is no nomination – Where the value of the shares is upto Rs. 1 lakh, following documents are required.
- Transmission request form (TRF)
- Death Certificate (Notarized)
- Indemnity Deed
- Affidavit for the transfer of legal ownership
- No Objection Certificate from the legal heirs.
Where the value of the shares is more than Rs. 1 lakh, following documents are required.
- Probated Will
- Certificate of Succession
- Surety Form.
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There can be two cases are there – When there is nominee mentioned or where there is no nominee mentioned.
Where the nominee is mentioned by the holder of the shares, following documents are required:
- Share Certificate (Original)
- Transmission request form (TRF)
- Death Certificate (Notarized)
- Affidavit for the transfer of legal ownership
Where the nominee is not mentioned, following documents are required:
- Transmission request form (TRF)
- Death Certificate (Notarized)
- Indemnity Deed
- Affidavit for the transfer of legal ownership
- No Objection Certificate from the legal heirs.
Non Compliance of the Act:
Every company must follow such procedure and accept such applications by the share holders and transfer such shares in prescribed time limit. If the company is found defaulting in such cases, there can be fine which shall not be less than Rs. 25,000 which can extend upto Rs. 5,00,000. Every officer shall also be said to be in default if such officer is found guilty, for which fine shall not be less than Rs. 10,000 which can extend upto Rs. 1,00,000.
Important issues in this topic:
- In case of the joint ownership of the shares, the other owner shall produce the joint ownership of the shares by showing the share certificate and transmit the shares in his name.
- There can be two possibilities with the company once the company receives the application from the person. One is that it can accept the application and transfer the shares. If company is not satisfy, it will not transfer, but it will have to communicate such facts to the concerned person within a period of 30 days from the date of receipt of the application.
- Stamp duty will not be applicable while transfer of such shares as such transfer is in form of transmission.