When a shareholder passes away or is declared insolvent, what happens to their shares? The answer lies in the Transmission of Shares — a legal process that transfers ownership without involving a sale. At Share Claimers, we help you navigate this complex process with clarity and confidence.
What is Transmission of Shares?
Transmission of shares refers to the automatic transfer of shares from a deceased or incapacitated shareholder to their legal heir or representative.
Why is Transmission of Shares Important?
Transmission is essential to maintain clear ownership records in a company’s register. It ensures that legal heirs or nominees receive rightful ownership and can exercise shareholder rights, including dividends, voting, and participation in meetings.
Key Differences: Transmission vs. Transfer of Shares
| Feature | Transmission of Shares | Transfer of Shares |
|---|---|---|
| Nature | Involuntary | Voluntary |
| Cause | Death, insolvency, etc. | Sale or gifting |
| Documentation | Legal proof like a death certificate | Share transfer form |
| Stamp Duty | Not applicable | Applicable |
Who Can Initiate Transmission of Shares?
The legal heir, nominee, or executor of the deceased shareholder’s will can initiate the transmission process.
Steps in the Transmission of Shares Process
Here’s a simple step-by-step breakdown of how to complete the transmission of shares:
1. Notify the Company
The nominee or legal heir must inform the company in writing about the shareholder’s demise or legal incapacity.
2. Submit Required Documents
Essential documents include:
- Death certificate
- PAN card of the claimant
- Share certificates
- Probate/will or succession certificate
- Affidavit and indemnity bond (if needed)
3. Verification by the Company
The company verifies the documents and checks for any legal discrepancies or pending liabilities.
4. Entry in the Register of Members
Once verified, the company registers the new owner’s name and updates the share register accordingly.
Timeline for Share Transmission
The process typically takes 15–30 days, depending on the completeness of documentation and the company’s internal procedures.
Legal Provisions Governing Transmission of Shares
The Companies Act, 2013 and the company’s Articles of Association (AoA) govern the process. The legal heir is not required to pay stamp duty, making transmission different from a regular share transfer.
Transmission of Shares in Demat Form
For shares held in Demat (electronic) form, the process is slightly different:
- Attach the required documents such as the death certificate, client master list, and KYC.
- The DP will process and update the ownership in the Demat account.
Tax Implications in the Transmission of Shares
Unlike the transfer of shares, transmission of shares is not taxable as income under the Income Tax Act. However, if the heir later sells the inherited shares, capital gains tax may apply based on the original acquisition cost and holding period.
Common Challenges in Share Transmission
- Missing documents
- Disputes among legal heirs
- No nominee registered
- Non-availability of succession certificate
At Share Claimers, we specialize in resolving these issues and ensuring a smooth transmission process.
Tips to Simplify Share Transmission
- Always nominate a person while purchasing shares
- Maintain updated records with the company
- Keep important documents like wills, certificates, and PAN handy
- Consult experts like Share Claimers to avoid delays
How Share Claimers Can Help
We assist families and legal heirs in completing the transmission of shares efficiently. Our services include:
- Legal document preparation
- Liaison with companies and registrars
- Fast-tracked resolution of disputes
- Personalized consultation and updates
We offer clarity, support, and peace of mind at every step.
Conclusion: The Right Way to Handle Transmission of Shares
The Transmission of Shares is a critical legal process that ensures continuity and rightful ownership after the loss of a shareholder. By understanding the procedure and taking expert help from Share Claimers, you can manage this transition with ease and legality.
Don’t let paperwork and formalities overwhelm you. Let Share Claimers be your trusted partner in managing the transmission of shares smoothly and lawfully.
