When it comes to managing shareholding rights after the death or incapacity of a shareholder, the Transmission of Shares is a crucial legal process. Unlike transfer, which is voluntary and involves consideration, transmission happens by operation of law. In this detailed guide by Share Claimers, we explain the process, requirements, and key differences between transfer and transmission of shares.
What is Transmission of Shares?
Transmission of Shares refers to the process through which the ownership of shares is passed on due to events such as the death, insolvency, or lunacy of a shareholder. It does not involve a sale or exchange and is typically a legal right of the legal heir or nominee of the deceased shareholder.
This process ensures that the rightful heir or legal representative can claim ownership of the shares and exercise all related rights, such as voting and receiving dividends.
Legal Provisions for Transmission of Shares
The Companies Act, 2013 governs the rules related to the Transmission of Shares in India. As per Section 56 of the Act:
- The company must register the transmission based on a valid application from the legal heir or representative.
- Transmission does not require any instrument of transfer like Form SH-4.
- No stamp duty is applicable.
The Articles of Association (AOA) of the company may have specific clauses that further govern how the transmission is handled.
Key Differences Between Transfer and Transmission of Shares
| Basis | Transfer of Shares | Transmission of Shares |
|---|---|---|
| Nature | Voluntary | Involuntary |
| Initiated by | Shareholder | Legal heir / Nominee |
| Documentation | Share transfer deed (SH-4) required | Legal documents such as will, death certificate |
| Consideration | Involves consideration | No consideration involved |
| Stamp Duty | Applicable | Not applicable |
Understanding this distinction is important for shareholders, legal heirs, and companies to follow the appropriate legal route.
Documents Required for Transmission of Shares
The process of Transmission of Shares involves submitting specific documents to the company’s registrar or the Board of Directors. These include:
- Certified copy of the death certificate (in case of demise).
- Succession certificate / probate of will / letter of administration from a competent court.
- Self-attested copies of the PAN card and Aadhaar card of the claimant.
- Share certificate (physical shares) or demat details (for dematerialised shares).
- Application for transmission of shares, duly signed.
- Indemnity bond and affidavit (if required by the company).
Every company may have its own format or additional requirements as mentioned in their AOA.
Step-by-Step Procedure for Transmission of Shares
- Notify the Company: The legal heir or representative should inform the company about the shareholder’s demise or incapacity.
- Submit Documents: Furnish all required documents such as the death certificate, succession certificate, and identity proofs.
- Board Approval: The Board of Directors will verify the claim and approve the transmission after satisfying legal requirements.
- Issue of New Share Certificate (if applicable): If the shares were in physical form, a new share certificate may be issued in the name of the claimant.
This entire process may take a few weeks depending on the company’s policies and document verification timelines.
Transmission of Dematerialised Shares
In case of demat shares, the procedure is handled by the Depository Participant (DP) where the shares are held. Here’s how it works:
- Submit the transmission form (Form TRF) to the DP.
- Provide death certificate and KYC documents.
- The DP will transmit the shares into the demat account of the legal heir.
- No stamp duty is applicable.
This process is relatively faster and easier than the physical transmission of shares.
Why Share Claimers is the Right Choice
At Share Claimers, we specialize in assisting clients with the seamless Transmission of Shares. Our experienced team helps with:
- Preparing and verifying legal documents.
- Liaising with companies and registrars.
- Guiding through court procedures for succession or probate.
- Ensuring compliance with legal and regulatory standards.
We simplify the process, reduce delays, and protect your legal rights as an heir or representative.
Important Points to Remember
- Always check the Articles of Association for company-specific rules.
- Without a nominee or will, a succession certificate is mandatory.
- In the absence of physical share certificates, ensure demat accounts are correctly managed.
Conclusion
Transmission of Shares is a legally sensitive and essential process that ensures the continuity of ownership rights after the death or incapacity of a shareholder. Whether you’re a nominee, legal heir, or a company handling such claims, understanding the legal steps involved is critical.
With Share Claimers by your side, navigating through this process becomes hassle-free and legally sound. For expert assistance in documentation and execution, contact us today.
