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CS Deepak Pratap Singh

When a person holds one or more shares jointly with one or more person(s) in a Company, he/she is called Joint shareholder.

Since a Joint Shareholder is different person, but in relation to private limited companies, joint shareholders are considered as a member.

According to the provisions of Section 2(68)(ii) of the Companies Act, 2013 in case of a private limited company joint shareholders are considered as one member, while counting number of members 200. If they are not considered so then the number of members may be increased 200, while counting joint shareholder as distinct person.

Since Joint Shareholders are not considered as legal entity or incorporated entities, which acquires legal status after incorporation. 

In case of legal entities holding shares, it does not mean that the members of that legal entities holding shares jointly.

In case of joint shareholders , each of joint shareholder is a separate member of the Company except where the Act provides that the Joint Shareholders would be treated as single member as provides in Section 2(68)(ii) of the Companies Act, 2013 in case of a private limited Company.

The rights and obligation of each Joint Shareholder will be governed by the provisions of Clauses of Articles of Association of a private limited Company.

All Joint Holders are members of the Company in general law, but provisions of the Act and Clauses of Article of Association of the Company may provide that the first named shareholder will be treated as member of the Company to the exclusion of others. The First Named Joint Shareholder will be treated as member and all correspondences or transactions will be done with him only.

As we know every person who holds shares in a Company, whether singly or jointly and whose name is appear on the Register of Members of the Company, will be treated as member of the Company.

Not in case of listed companies the regulations provides that one or more shares cannot be held by more than three persons jointly.

Similar provisions generally found in case of non listed companies such that “one or more shares in a company, can be held by not more than three persons jointly.”

IN CASE OF DEATH OF JOINT SHAREHOLDER;

Joint Shareholdings are beneficial in some cases, such in case of death of a Joint Shareholder; the remaining Joint Holders will be entitled to the shares under Joint Shareholdings not the legal representatives of deceased Joint Shareholder.

Regulation 23 of Table F in Schedule I to the Companies Act, 2013; provides that on the death of a member of a company, the survivor or survivors, where the members was a Joint holder and his legal representatives , where he was the sole holder , shall be the only person(s) recognised by the company as having any title to his interest in the shares.

Now in case of Joint Shareholding, the remaining Joint Shareholders only have right and interest in the shares held in Joint Shareholding, not the legal representatives of the deceased Joint Shareholder. A Legal Representative will acquired rights and interest in the shares of the company only in case of Sole Holding of shares in the name of deceased holder.

TRANSFER OF SHARES IN CASE OF JOINT SHAREHOLDING;

No instrument of transfer in necessary in case of transfer of share in the name of Joint Shareholder.

Since Legal Representative/ Heir of a deceased Joint Shareholder has not right and interest in share held in Joint Shareholding and also he/she cannot claim that the shares will be registered in his/her name.

If the legal representative / heir of the deceased shareholder is to be registered as a member of the company, the company will require Transfer Instrument to be submitted, where surviving Joint Holders will be treated as Transferor and the Legal / Heir of deceased Joint Holder will be treated as Transferee.

In case of split of Joint Shareholding in the name of separate joint shareholders is also required Transfer Instrument as transferor(s) and the respective individual holders(s) , in whose name(s) the split is to be made , will sign as transferee(s) in the respective transfer deed(s) and same to be submitted with the Company.

SPECIAL PROVISIONS FOR JOINT SHAREHOLDINGS UNDER PROVISIONS OF THE COMPANIES ACT, 2013;

1. Joint Shareholders may acting together appoint a nominee in respect of their Joint Shareholdings according to the provisions of Section 72(2);

2. In respect of any share or shares held jointly a company is not bound to issue separate Share Certificate to all Joint Shareholders. The delivery of one share certificate for a share to one of the several Joint Shareholders shall be sufficient according to [Regulation 2(iii) of Table F of Schedule I].

3. The Joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.[ Regulation 15 of Table F of Schedule I]

4. On the death of Joint Shareholder, the survivor or survivors shall be the only person(s) recognised by the company having any to his interest in the shares [Regulation 23 of Table F of Schedule I].

5. In case of Joint Shareholding the senior member will vote at the meetings, whether in person or by appointing a proxy to the exclusion of vote of other Joint Shareholders .The seniority will be determined by the order in which their names stand on the Register of Members of the company[ Regulation 52 of Table F of the Schedule I].

6. All dividend, interest or other payments payable in cash may be paid by cheque or warrant sent through the post directed to the registered address of the one of the joint holder who is first named in the Register of Members or such person to such address as the holder or joint holders in writing direct[ Regulation 85 of Table F of the Schedule I].

7. Any one the two or more joint holders of a share may give effective receipts for any dividends, bonuses or other monies payable in respect of such share [Regulation 86 of Table F of Schedule I].  

(Author can be reached at cs.deepakpsingh@gmail.com)

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A Qualified Company Secretary, LLB , AIII , Bsc( Maths) BHU, Certification in Insurance Risk Management ( ICSI-III) have completed Limited Insolvency Examination and having more than 20 years of experience in the field of Secretarial Practice, Project Finance, Direct Taxes ,GST, Accounts & F View Full Profile

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27 Comments

  1. Amita Desai says:

    Kindly confirm whether Succession Law supersedes the Companies Act 2013 and SEBI Regulations.

    If the shares are held 50:50 and 1st holder dies making his Will that his 50% share will be given to his Son. His Son sends the Will and death certificate of the 1st Holder of the share. Whether the Company’s secretarial department not take note of his Will and ask for the Probate?

  2. ASHOK RAJPARA says:

    Share Jointly held by three person. Shares are in physical Form, One by one all the joint holder died. Now tell me whose name these are Shares to be transferred ? last joint holders’s legal representative or all the joint holders’s legal representative ? There is no any clarification about transferred of shares on all the joint holder’s death.

  3. rajesh s says:

    Hi Deepak Sir,
    My deceased father held shares jointly with other 2 members of which 1 is my family member and the other was father’s friend son.
    Can I as one of joint shareholder claim my part of shares leaving out the friend’s son part of shares. According to me this joint holders were created to buy more shares from Reliance Industries. Kindly help me in this regard

    These shares were held physically so once we get it dematerialised to our respective demat account – can we claim bonus shares to reflect too in our demat account.

    1st Holder: Brijkishna (deceased)
    2nd Holder Ravindra Chandel
    3rd Holder Rajesh (myself)

    Can you take up this scenario and provide a brief response for which i would be very grateful as I have no reliable sources to whom I could ask this question before approaching RTAs with document submission.

    Regards
    Rajesh

    1. rajesh s says:

      Here Brijkrishna is my father and Rajesh myself as a son while Ravindra Chandel is an outsider Father’s friend son with whom we have no contact details, this is almost 10-12 years back story. Can we claim our part of shares leaving part of shares rights of Ravindra.

  4. Manoj says:

    Hi Deepak ji,
    We are private limited company share holding in following pattern
    A individual = 49%
    B individual = 49%
    C Private limited company ist holder with joint person A as 2nd holder1%
    C Private limited company 1st holder with joint person B as 2nd holder 1%
    That makes A 49 % B 49 % C 2 %
    Basically shares were given with unregistered Share holder understanding agreement on stamp paper, stating C will not have any financial interest. Now we have dispute among A & B C is favoring B and acting as kingmaker. There is court case filled with NCLT by A and B & C are respondant also. Can A ask C to return the share 1% of A, which was given to him in good faith? A is having only draft SHA

    1. DEEPAK PRATAP SINGH says:

      Dear Sir
      This is to inform you that in case of oppression and mismanagement, we have to approach NCLT and file petition for remedial orders. Then wait for orders of NCLT.

      In case you have SHA , please check terms of termination of agreement and give notice to C accordingly or otherwise , you have to wait for NCLT Order .

      Regards

  5. Deepak Boradia says:

    We Solve any Kind of Legal/Disputed Case of Physical Share , Contact to Convert Physical Share into Dmat….Aries Physical Share : 9619265567

  6. Subodh says:

    Request your opinion on Joint Holding of Shares in Pvt. Ltd. Co. wherein the first holder is Indian Resident and Second Holder is Foreign Resident. Can the company accept such an application for issue of shares. Payment for application has been made by Indian Resident. Is there any bar in allotment of shares to the joint applicants.

    1. CS Deepak Pratap Singh says:

      Dear Sir
      Please note that

      Investment in a limited Company: NRIs may invest in shares/Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCDs)/warrants/ partly paid up shares of an Indian company under Foreign Direct Investment (FDI) Scheme, subject to the terms and conditions specified in the Guidelines.

      The amount can be transferred from the banking channel from an account of NRI overseas or from NRE account of the NRI in India.

      The investment under the FDI guidelines is on repatriable basis and the sale proceeds of the shares can be taken out of India.

      The NRI can also invest from their NRO account in India. The investment would be non- repatriable basis.

      A NRI can invest in Indian company in joint shareholding also.

      Regards

  7. Ak says:

    What is the provision in the law when the 2nd holder is missing or non traceable since last 15 years.

    I am the 1st holder of the shares. I am unable to change the address nor can I do demat.

    Pls guide or advise

  8. lelemm says:

    hi deepak,
    few questions.
    1. can 2nd name shareholder controls the voting ability of 1st name shareholder. Means can 2nd name shareholder directs 1st one how to vote or whether to vote?
    2. can 2nd one directs 1st one not to avail right offer etc
    3. can 1st holder voluntarily relinquish his right of voting etc to 2nd one.
    4. all above will be done by excluding applicability of section 47, article 52, 53 of table A through articles of a private company.

  9. Swapnil Kasera says:

    Thanks for this article, can you update how can joint share holder of private ltd company be converted to 1st share holder name (2 brothers). Basically name delete of 2nd person?

  10. Amrish Maheshwari says:

    Dear Sir,

    My Uncle and my father jointly hold some shares in physical form.

    My uncle says as he is the first holder he only has the right to get the total sale proceeds of the shares and is not ready to split up the shares with my father.

    Sip please suggest me weather only the first holder has the right on the shares or the joint holder also has equal rights and how to go about it so that my father gets his share.

    Thanks & Regards…

  11. Raj says:

    The wording of the law related to joint ownership is clear towards the share ownership of the second named shareholder to the exclusion of any other claimant based on whatever claims and alleged rights. Otherwise, the first named shareholder should have changed the second named.

  12. sudershan says:

    Who can be joint holders – whether only natural person OR ONE COMPANY WITH ONE INDIVIDUAL -INDIAN CO. AND INDIVIDUAL ONLY- CAN BE JOINT HOLDERS FOR ben-2

  13. RAM KARAN GUPTA says:

    DOES THIS MEAN, AFTER DEATH OF JOINT HOLDER, THE OTHER FIRST HOLDER BECOMES THE OWNER AND THE DESCENDANTS OF JOINT HOLDER SHALL HAVE NO RIGHT OR CLAIM AT ALL.

    IN CASE OF DEATH OF JOINT SHAREHOLDER;

    Joint Shareholdings are beneficial in some cases, such in case of death of a Joint Shareholder; the remaining Joint Holders will be entitled to the shares under Joint Shareholdings not the legal representatives of deceased Joint Shareholder.

    Regulation 23 of Table F in Schedule I to the Companies Act, 2013; provides that on the death of a member of a company, the survivor or survivors, where the members was a Joint holder and his legal representatives , where he was the sole holder , shall be the only person(s) recognised by the company as having any title to his interest in the shares.

    NOT VERY CLEAR TO ME.

  14. YATIN SHAH says:

    I HAVE RELIANCE IN JOINT HOLDER
    1ST HOLDER NOT IN CONTACT
    2ND HOLDER I AM AND I M APPLIED THOSE SHARE IN JOINTLY BUT 1ST HOLDER NOT IN CONTACT NOW, I HAVE ALL DOCUMENT OF PAYMENT VIA DD TO RELIANCE EQUITY, WHAT I DO FOR THIS SITUATION

    9227727136

  15. Chandrashekhar B. Prabhumirashi says:

    Sir,

    I have a query over the ownership of shares jointly held by two shareholders.

    In case of one of my clients, the shares were held by the deceased mother and her daughter before death of the said mother. (Mother’s name was the first name in these shares & daughter’s name was second name in these shares).

    My client being the son of this deceased mother and filed a case with appropriate authority claiming his ownership of the shares held by the deceased mother.

    As per his contention, the deceased mother was being looked before immediately her death by giving necessary medical and other help to his mother and wherein at that time the daughter had not paid any attention to her mother.

    Further the deceased mother has made a Will duly notarised and in her Will, she declared that these shares would be owned by her son only after her death.

    Now can you please send your note on this matter to me as to who would be the real owner of these shares?

    Waiting for your reply.

    With regards.

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