CS Ankur Garg
In my previous article I shared the procedure for Transfer of Shares under Companies Act, 2013. Now it is time to discuss Procedure for Transmission of Shares under Companies Act, 2013. Through this write up we shall discuss the meaning of Transmission of Shares and procedure to execute Transmission. The word ‘transmission’ means transfer of title by operation of law. It may be by succession or by testamentary transfer.
Transmission of shares
A transmission of interest in shares of a company, of a deceased member of the company, made by the legal representative of a deceased member shall be considered as transmission of shares by operation of law. This transmission will be registered by a company in the Register of Members.
For statutory provisions related to Transmission of share one should refer the following sources:
1. Section 56 of Companies Act, 2013
2. Provisions given in model articles of association given in Table ‘F’ of Schedule-I
“Relevant” Text of Section 56 and Rule 11 are reproduced below for ready reference:
Transfer and transmission of securities
Section 56 (2) Nothing in sub-section (1) shall prejudice 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 right has been transmitted.
(3) Where an application is made by the transferor alone and relates to partly paid shares, the transfer shall not be registered, unless the company gives the notice of the application, in such manner as may be prescribed, to the transferee and the transferee gives no objection to the transfer within two weeks from the receipt of notice.
(4) Every company shall, unless prohibited by any provision of law or any order of Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred or transmitted—
(a) within a period of two months from the date of incorporation, in the case of subscribers to the memorandum;
(b) within a period of two months from the date of allotment, in the case of any allotment of any of its shares;
(c) within a period of one month from the date of receipt by the company of the instrument of transfer under sub-section (1) or, as the case may be, of the intimation of transmission under sub-section (2), in the case of a transfer or transmission of securities;
(d) within a period of six months from the date of allotment in the case of any allotment of debenture:
Provided that where the securities are dealt with in a depository, the company shall intimate the details of allotment of securities to depository immediately on allotment of such securities.
(5) The transfer of any security or other interest of a deceased person in a company made by his legal representative shall, even if the legal representative is not a holder thereof, be valid as if he had been the holder at the time of the execution of the instrument of transfer.
(6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.
Main Provisions related to Transmission of Share
1. Person eligible to apply for transmission:The survivors in case of joint holding can get the shares transmitted in their names by production of the death certificate of the deceased holder of shares. In other words in case of joint holding, the survivor or survivors shall only be entitled for registration and the legal heir of the deceased member shall have no right or claims.
2. Share transfer deed not required for Transmission: Execution of transfer deed not required in case of transmission of shares. Intimation/application of Transmission accompanied with relevant documents would be enough for valid transmission request.
3. Documents required for Transmission of Shares:In case of transmission of sharesby operation of law, it is not necessary to execute and submit transfer deed. A simple application to the company by a legal representative along with the following necessary evidences is sufficient:—
a. Certified copy of death certificate;
b. Succession certificate;
c. Probate;
d. Specimen signature of the successor.
4. Liability on shares shall continue: In the case of a transmission of shares, shares continue to be subject to the original liabilities, and if there was any lien on the shares for any sums due, the lien would subsist, notwithstanding the devaluation of the shares.
5. Payment of consideration or stamp duty not required: Since the transmission is by operation of law, payment of consideration or payment of stamp duty would not be required on instruments for transmission.
6. Time limit for issue of share certificate on transmission (Section-56(4)): Every company, unless prohibited by any provision of law or of any order of any Court, Tribunal or other authority, shall, within One month deliver, the certificates of all shares transmitted after the application for the registration of the transmission of any such shares received.
7. Time Limit for Refusal of registration of Transmission:Provisions related to Refusal of registration and appeal against refusal is given in Section 58 of the Companies Act, 2013.Power of refusal to register transmission of shares is to be exercised by the company within thirty (30) days from the date on which the intimation of transmission is delivered to the company.
8. Time Limit for appeal against refusal to register Transmission by Private Company:As per section 58(3), the person who gave intimation of the transmission by operation of law,may appeal to the Tribunal against the refusal within a period of thirty (30) days from the date of receipt of the notice from the Company or in case no notice has been sent by the company, within a period of sixty (60) days from the date on which the intimation of transmission was delivered to the company.
9. Time Limit for appeal against refusal to register Transmission by Public Company: As per section 58(4), the person who gave intimation of the transmission by operation of law may, within a period of sixty (60) days of such refusal or where no intimation has been received from the company, within ninety (90) days of the delivery of the intimation of transmission, appeal to the Tribunal against such refusal.
10. Penalty for Non-compliance: Where any default is made in complying with the provisions related to transmission of shares, the company shall be punishable with fine which shall not be less than Rs. 25,000/- but which may extend to Rs. 5,00,000/- and every officer of the company who is in default shall be punishable with fine which shall not be less than Rs. 10,000/- but which may extend to Rs. 1,00,000/-.
Extremely useful Information and knowledge about Transmission documents:
i. Meaning of Probate: If a member of a company dies and he leaves after him a will or letter of administration then the survivors shall get a copy of ‘will’ certified under the seal of a Court of competent jurisdiction. The certified copy of the will is called a ‘probate’. Succession certificate is not required when probate or letter of administration is issued.
ii. If a member of a company dies without leaving a will, then succession certificate issued by a Court of competent jurisdiction shall be submitted to the company. Once succession certificate is granted, it provides full indemnity to the company regarding transmission of shares by operation of law.
iii. The survivors in case of joint holding can get the shares transmitted in their names by production of the death certificate of the deceased holder of shares.
Basic Procedure for Transmission of Share
Generally articles contain the detailed provisions as regards the procedure for transmission of shares. Usually following steps shall be followed in order to give effect to the transmission of shares:—
1. The survivor in case of joint holding or legal heir, as the case may be, who want transmission by operation of law in his/her favour, shall filea simple application with the Company with relevant documents such as death certificate, succession certificate, probate, etc., depending upon various circumstances may be considers necessary for transmission by the Company.
2. The company records the particulars of the death certificate and a reference number of recording entry is given to the shareholder so as to enable him to quote such number in all future correspondence with the company.
3. The company review and verify the documents submitted with transmission request. In case all the documents are in order, company shall approve the transmission request and register the shares in the name of the survivor or legal heir as the case may be.
4. However in case documents submitted with transmission request are not in order and it is the case of refusal, company shall within thirty (30) days, from the date on which the intimation of transmission is delivered to the company, communicate refusal to the concerned person.
5. Dividend declared before the death of the shareholder will be payable to legal representative but dividend declared after the death of a member can be paid to him only after registration of his name and till that period it has to be kept in abeyance.
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Sample application for transmission of shares
To, Date: Sept. 04, 2014
The Board of Directors,
Reliance Industries Limited
Nariman Point, Old Palasia Road,
Mumbai (Maharashtra)
Sub: Transmission of 500 Equity shares held by Late Sh. Yogesh Gupta
Ref.: L.F. No.____________
Dear Sir/Madam,
I have to inform that my fatherLate Sh. Yogesh Gupta expired on August 19, 2014. He was holding 500 Equity Shares of Rs. 10 each fully paid up in the company under L.F. No. 165.Please find below relevant details of the Equity Shares :
|
Share Certificate No. | No. of Equity Shares | Ledger Folio No.Transferor | Distinctive NumberFrom | Distinctive NumberTo |
| 1. | 165 | 500 | 165 | 783201 | 783700 |
I, hereby submit the following documents for transmission of 500 Equity Shares in my name:
- Copy of the death certificate obtained from Nagar Nigam, Maharashtra.
- Succession Certificate.
- Original share certificate.
- My Specimen signatures.
Kindly consider and arrange for transmission of the said shares in my favour and oblige.
Thanking you.
Yours faithfully
(Rahul Gupta)
(Son of Late Sh. Yogesh Gupta)
Address:
Phone No.:
———–
Disclaimer: This write up is intended to start academic discussion on few significant interpretations under Companies Act, 2013. It is not intended to be a professional advice and should not be relied upon for real time professional facts. Readers are advised to refer relevant provision of law before applying or accepting any of the point mentioned above. Author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write up.
I am hopeful that this write up would be of some help w.r.t. your professional working and endeavors under Companies Act, 2013. Kindly share your opinion.
(CS Ankur Garg – Connect through Facebook )
Sir,
Is Surety required to (submit / or is it mandatory) to submit his IT return in the case of transmission of shares. If so under which sec it is mentioned.
What is the procedure for relinquishing of joint holding in favour of the legal heir of the deceased by the survivor in a demat account ?
For what value of the equity shares can a company ask for a succession certificate compulsory.
i am in a possession of a Registered WILL executed by my father & I am the exclusive legal heir of my father securities & assets.
My father have 100 shares of Birla cable Ltd. value of shares: ₹ 18,000/- only.
is there a necessary to execute a indemnity bond ? as I am in a possession of a Registered WILL and I am the exclusive legal heir of all my father securities. The Registered WILL is proving my exclusively heir ship.
pl. reply sir
Ramesh B Jain
Visakhapatnam
Mobile no. : 9441341274
Hello sir,
if the director dies then what procedures company needs to follow means what form they have to file to the ROC. or document needs to file to ROC
Hello Sir,
Birva here,
Needing advice for TRANSMISSION OF SHARES and matter as below:
* TWO FOLIO NUMBERS (HOLDER IS ONE)
* ONE FOLIO HAVE JOINT HOLDER
* OTHER FOLIO HAVE DIFFERENT NAME (SPELL MISTAKE ON CERTIFICATE)
__________________________________________________________________
1) ORIGINAL HOLDER EXPIRED
2) SHARES IN PHYSICAL MODE
3) NO NOMINEE
4) VALUE IS MORE THAN 2,00,000
5) JOINT HOLDER OF 1 FOLIO IS LIVING
I AM LEGAL HEIR OF DEATH PERSON.
KINDLY, INFORM ME PROCESS OF TRANSMISSION OF LOST SHARE CERTIFICATES.
Don’t have a Will of my father and my parents are no more. I have a sister. When I got in touch with a Company for transmission in our joint names it’s asking for probating of Will. How is it possible to transmit the shares without Will. Secondly I was told that if only the Face Value of the shares is more than Rs. Five lakh it requires Probating. Thirdly is it Face Value or Market Value on the day of Claim.
Pl clarify and help. I myself is a Senior Citizen.
Whether legal heirs of deceased director of a private limited company can partition of the shares held by deceased director before civil Court with applying for transmission of shares and without exhausting the remedy before the NCLT
I have a succession certificate and the value of shares is more than 2 lacs rupees. Do I need the Indemnity Bond and other Affidavits Documents to claim the shares from IEPF?
Dear Sir,
Your article clarifies various doubts relating to transmission of shares. However, i required clarification if the director died 8 years back can the successsor of the director apply for transmission of shares at the present date in the company. Is there any specific requirement or compliance to be done?
Please do the needful.
Dear sir
\ i would like to know what is the procedure of transmission of shares where my uncle is NRI and having NRO account also having physical shares ,he got will is made in Amreca and probate is also issued in america
we got death certificate, appointment of uncle from superior court, also probate,.
want to ask will the company accept the will and probate of america
kindly explain how to proceed how to do transmission of shares to legal heirs
regrds
bharat
My father held shares in around 200 companies out of which 12 companies shares are Rs. 5 lakhs each. My DP/DMAT company is giving hard time, first they suggest to sell all shares and buy on my mother name (Legal heir), which is didnt agreed, then asked for a application on white paper with Death Certificate and copies of PAN, AADHAR etc. We sent them, now they are asking for succession certificate from court. We found that my dad had made a will (My mother and my cousin who is a lawyer confirmed this) but yet to find it (Two of the Bank Lockers yet to open -delayed due to various reason).
My questions are
1. can we apply to individual companies if so what documents we need,
2. As succession certificate costs more money and time can we apply with WILL (If we found it in the lockers, which is unregistered WILL as per known information, but not sure)
3. Where should we complaint about these DP Companies in case of non co-operation (My father gave a big business)
Thanks in advance.
Same Case. I was going through this circular no: SEBI/HO/MIRSD3/CIR/P/2016/0000000085.
Now I cannot understand if I want to legally transmit shares of different companies.
1) Can all the shares of different companies be mentioned inside one single succession certificate ?
With Regards
Pranab Pal
DEAR SIR
MY PARENTS HAVE PASSED AWAY
WE ARE GETTING DIVIDEND SLIPS OF THE SHARES BUT NOT IN POSITION TO FIND THE ORIGINAL SHARE CERTIFICATES
WHAT SHOULD I DO ??
Hi Ankur,
I am trying to get transmission of shares after the death of my father on me and my mothers name.
And after providing documents twice I am facing rejections the reason company is not providing me complete details in one go.
I already spend a lot in paper works and speed post. Where can I complaint against the company linkIntime?
KIndly let me know upto what amount of the shares ,the companty may transmit the shares to to the heirs
without succession certificate ie with only providing an indemnity with sureties
which is applicable for share transmission ?face value or todays share price pl answer me
Thanks for your information. Please clarify whether copy of the Nomination Form filed and Registered with the company need to be produced to the company at the time of transmission of shares? If the copy of the Nomination form is not traceable then we need to produce to produce FIR (First Information Report) from the Police station to confirm the non availability of the copy of the nomination form?
My husband held 100 shares of Glaxo Smith kline beecham LTd share today market value Rs 6 Lacs approx.My husband expired 5 yeras ago. I would like to know if it is possible to get the shares transmitted in my name(wife of the deceased no children) by providing indemnity with sureties with worth say ! crore in property instead of succession certificate which is very time consuming and also costs a lot of money. pl reply
Mr.Ankur, Pl clarify if legal heir certificate can be substituted in place of succession certificate. Some compies seek affidavit on non judicial stamp paper of the requisite value as per the stamp act of the state in which executed (A stamp paer value of Rs,100 / or 500) and deed of relinquishment on Rs. 20 stamp paper is it necessary when the identity of legal heirs is established by the certificate issued by revenue officials.
Sir We received the succession certificate on 14 july 2017 after 19 years. And then received by the company on 19july 2017. Now after receiving the required death cert.,succession cert.along with all the kyc documents the company is demanding an indemnity bond on a rs 500 nonjudicial stamp to be guaranteed by two gazzeted officers/chartered accountants/company secretaryies along with the legal heir. Please let me know if an indemnity is required in such manner. as per company official as the physical share cert. are not with anyone of us since 19 years.
OK Sir, I AWAIT YOUR GUIDENCE
I applied to transmit shares of Universal Cables Ltd. to their RTA Link Intime P.Ltd., Mumbai. As per their requirement I submitted Original Shares certificates along with notarized copy of Succession Certificate granted in my name by Civil Court at Vadodara, Gujarat. Also wereaself certified copy of my PAN, self certified copy of my ADHAAR, self certified copy of the then recent electricity bill of my residence, affidevit for ‘No Nomonation’ for shares held by my father( draft provided by RTA), my specimen signature certified by my Bankers. After all theses doccuments, they rejected the application asking to provide NOC from other legal hairs. I explained to them as Succession Certificate is granted to me, NOC of other legal hairs is not required, but they do not respioce to my registered letters also. Pl guide me what can be done.
kindly advise what can we do in case the share certificate is misplaced at the time request made for transmission?
If company defaults , where to file a case and how
M was a shareholder and member of KEL a private company with 65 ordinary shares of shs.100000= each. He died intestate survived by a son MJ aged 19 years. The company wishes to pass a special resolution to dispose of part of its undertaking. What procedure and steps should the board take to effect the above transaction in compliance with the law?
Dear Sir,
Thank you for Artical. I Have query Regarding Stamp duty payable in Sucession certificate in a court in Maharashatra it is payable in a Market Valuation of shares or Face Value of shares. If Your Answer is stampduty is payable in Market Valuation ? Then How to consider Valuation of stock Because Market Value is change every day. Or If Stamp duty is payable in face Value then where is a provision ?
i had purchased some shares in the individual names of my father and mother;
my parents passed away leaving two sons and three daughters.
kindly advise the procedure to be followed to get the shares transferred to my name (one of the heirs). there is no will.
Re:Succession Certificate
Case: Shares are held in Joint names.
Share holder 1 died in 2010 & Share holder2 died in 2011 without a will.
Succession certificate received in 2013 by a legal heir incorporating the
share holder 1’s name.
Query :Company “A” have rejected the Transmission application based on the above
Succession Certificate & insist for incorporation of Share holder 2’s
name.Are they correct in asking for an incorporation & ammendment to the
Succession Certificate, or is there any circular or notification which
entails the claimant to apply status quo ante & seek an waiver on any
ammendments to the Succession Certificate.
Pl advice with the relevant notification/circular or rule/subrule of the Company’s act.
Regards,
Ravi Venkit
Hi..
While the shares were in joint names, when 1st holder dies, there is full control of 2nd holder regarding holding, when 2nd holder dies, then his succession is valid.
In your case you are having succession certificate of 1st holder but the legal heirs of 2nd holders must include their names in succession certificate as they are having 100 % share.
Also in joint holders case, when both the holders expires, only latest death certificate is valid for succession.
Sir,
I wanted to know if there is any form which needs to be filed with ROC or any other authority?
Thanks Sir
I Would like to know if shares are in singal name & Nomination Form is Signe by Share holder(Decces) then also transmission aplication to be done with succession certificate
Thanking you
Bhupesh
Sir,
Is Surety required to (submit / or is it mandatory) to submit his IT return in the case of transmission of shares. If so under which sec it is mentioned.
thankyou sir for this informative article,
I just wanted to get the basic knowledge about the difference between transfer an transmission of shares..
thankyou
pls tell me
in a case if shareholder is died but share is not transmitted by operation of laws therefore company want to show the shareholder name (deceased) in minutes for present list or not
Yes. Ultimately a board resolution would be passed to “record” the transmission and as per the general practice I have observed that an entry would be enough on the reverse of the share certificate.
Further accepting indemnity letter in place of other statutory proofs would be discretion of the company which depends on the policy followed by the Company.
Thanks
Sir,
Thanks for this informative article. I have a query regarding this.
Whether new share certificate is required to be issued to the legal heir with diffrent folio and certificate no or just an entry is required on the reverse of the share certificate as we do in case of transfer. Plz guide.
thanks sir for this very useful article containing the provision along with format of letter requesting for transmission of shares.
but i want to know that do we need not to pass board resolution registering the transmission.
Thanks Sir, for the informative article.
I understand that for transmission of shares a valid will or succession certificate is required. However, can we not initiate the transmission procedure based on an indemnity bond by the heir of the deceased member of the Company?
Can we take the signatures of all the family members and relatives as sureties on such an indemnity bond?
Will the Company be fully indemnified by such an act?
The problem in getting the succession certificate is that the shareholder held very small fraction of shares of the Company and the heirs do not want to obtain a succession certificate by going into any court.