Transmission of Shares – Everything You Need to Know
The Transmission of Shares is a crucial process in the corporate world, especially when it involves the legal transfer of shares due to the death, insolvency, or lunacy of a shareholder. At Share Claimers, we simplify this often complex procedure, ensuring smooth compliance with the law and protection of shareholder rights.
Understanding the transmission process is essential for both investors and company administrators. This comprehensive guide will walk you through everything you need to know about the transmission of shares—legal definitions, required documents, step-by-step processes, and how Share Claimers can assist.
What is Transmission of Shares?
Transmission of shares refers to the process of transferring shares from a deceased or incapacitated shareholder to their legal heir or representative. Unlike a regular share transfer, which involves a transaction between two living parties, transmission is involuntary and governed by law.
This process ensures that the rightful owner—usually a nominee or legal heir—receives the shares without violating any corporate regulations or shareholder agreements.
Legal Basis of Transmission of Shares
Under the Companies Act, 2013, the provisions related to the transmission of shares are laid out in detail. The act mandates that in the event of death or incapacity of a shareholder, the company must recognize the legal heir, executor, or administrator as the rightful person to whom the shares will be transmitted.
Key Legal Points:
- No stamp duty is applicable during the transmission of shares.
- The Board of Directors holds the right to approve the transmission.
Transmission vs. Transfer of Shares
| Aspect | Transmission of Shares | Transfer of Shares |
|---|---|---|
| Nature | Involuntary | Voluntary |
| Cause | Death, insolvency, or lunacy | Mutual agreement between parties |
| Stamp Duty | Not applicable | Applicable |
| Documentation | Legal heir documents | Share transfer form (Form SH-4) |
| Approval | By Board | By both parties & Board |
Understanding this distinction is essential when dealing with changes in shareholding due to unforeseen circumstances.
When Does Transmission of Shares Occur?
Transmission can happen due to several legal reasons:
- Death of the shareholder
- Insolvency of the shareholder
- Mental incapacity or lunacy
- Succession as per will or intestate laws
Each situation demands specific documentation, and the process must be handled with legal precision to avoid future complications.
Step-by-Step Process of Transmission of Shares
At Share Claimers, we follow a streamlined procedure to handle the transmission of shares efficiently. Here’s how the process works:
1. Notification to the Company
The legal heir or nominee must inform the company about the shareholder’s demise or incapacity, along with the request for transmission.
2. Submission of Documents
Important documents include:
- Death Certificate (in case of demise)
- Probate or Succession Certificate
- PAN card of legal heir
- Affidavit and indemnity bond
- Share certificates (if in physical form)
- KYC details of the claimant
3. Review by the Company
The company’s Board reviews all submitted documents. If everything is in order, the application is placed for approval in the next Board meeting.
4. Board Resolution
Upon verification, the Board passes a resolution for the transmission of shares in the name of the legal heir or nominee.
5. Updating the Register of Members
The name of the new shareholder is updated in the company’s Register of Members. If the shares are in DEMAT form, the depository participant updates the records accordingly.
Important Documents Required
To ensure a smooth transmission process, the following documents are generally required:
- Copy of death certificate (self-attested)
- Duly filled transmission request form
- Succession certificate or probate of will
- Affidavit & indemnity bond (on non-judicial stamp paper)
- Share certificates (original, if in physical form)
- KYC documents of the claimant
Always ensure that all documents are correctly signed, notarized, and submitted in a timely manner to avoid delays.
Transmission in DEMAT vs. Physical Form
Transmission-DEMAT Form:
- Managed by depository participant (NSDL or CDSL)
- Quick processing
- Less paperwork
Transmission in Physical Form:
- Requires submission to company registrar
- Manual verification
- Time-consuming process
At Share Claimers, we help claimants navigate both physical and DEMAT transmission procedures with ease.
Timeframe for Completion
Once all required documents are submitted, the transmission process typically takes 15 to 30 days, depending on the complexity and response from the legal heir or claimant.
Delays can occur due to:
- Incomplete documents
- Legal disputes among heirs
- Verification delays
Common Mistakes to Avoid
- Delaying the process – Can lead to legal complications or disputes.
- Submitting incomplete documentation – Causes rejections and time loss.
- Not understanding DEMAT vs. physical share differences
- Ignoring company’s Articles of Association (AoA) – Always cross-check for company-specific rules.
Share Claimers assists in mitigating these issues by offering end-to-end support.
Why Choose Share Claimers for Transmission of Shares?
We at Share Claimers understand how sensitive and complex the transmission of shares can be. Our legal experts help you:
- Ensure accurate and timely submission of all documents
- Navigate legal formalities without stress
- Communicate with the company or registrar on your behalf
- Maintain compliance with the Companies Act and SEBI rules
Our client-first approach guarantees peace of mind during a potentially stressful period.
Conclusion
The transmission of shares is a legal and procedural necessity when a shareholder passes away or becomes incapable of managing their assets. With the right guidance, this process can be completed smoothly, ensuring rightful ownership and uninterrupted corporate governance.
At Share Claimers, we provide expert assistance to legal heirs, ensuring a hassle-free transmission process. Whether you’re dealing with DEMAT or physical shares, our experienced professionals are here to help you every step of the way.
If you’re looking for a reliable partner to assist with the transmission of shares, trust Share Claimers—your expert in share recovery and corporate compliance.
