Transmission of Shares As Per Companies Act 2013

The word ‘transmission’ means transfer of title by operation of law. It may be by succession Transmission of shares is a process by operation of law where under the Shares are registered in a Company in the name of deceased person or an insolvent person are registered in the name of his legal heirs by the Company on proof of death or insolvency as the case may be.

Transmission of shares takes place when registered member dies or is adjudicated insolvent or lunatic by competent court.

Section 56 of the Companies Act, 2013 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.

Documents required for Transmission of Shares:

In case of transmission of shares by 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; (Succession certificate is a document issued by a competent court (civil) certifying a rightful person to be the successor of a deceased person)

c. Probate (sample given below);

d. Specimen signature of the successor..

Note 1: If a member of a company dies and he/she 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.

i. 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

Note 2: Such a legal Representative is however, not the member of the Company but the legal owner of the Shares instead of registered as a member, he may make transfer the shares as the deceased or insolvent member could have made.

Note 3: Where title to the shares comes to vest in another person by operation of law, it is not necessary to submit transfer form.

Note 4: Since the Transmission is by the operation by law, so neither the stamp duty nor consideration is required on instrument of transmission. 

Note 5: The legal Representative of a deceased member shall not be entitled to exercise voting rights or other rights in a general meeting unless he is registered as a member in respect of the Shares.

Note 6: Transmission in case of Joint Shareholding:  Regulation 23 of Table F of the Companies Act, 2013 provides that on death of a member where member was joint shareholder, the survivors or survivor shall be the only persons recognized by the Company. The legal heirs of deceased member are not entitled to get registered as joint holder along with surviving holder.

Modes of Transmission of Shares:-

1. The Survivors in case of joint shareholding can get the share transmitted on production of the death certificate of deceased shareholder.

2. If the member of the Company dies and leaves after him a will or letter of administration then survivor shall get the copy of will certified under the seal of the Court. The certified copy of will is called a probate and it shall be forwarded to the Company.

3. If Member of the Company dies without leaving a Will, then succession certificate issued by the Court shall be issued to the Company.

4. Transmission in case of small shareholding:- Transfer may be considered and affected by the Company without obtaining succession certificate. The Board of Directors shall ensure that sufficient evidence has been produced by the legal heirs.

Format for Transmission of Shares

(in case there is no WILL and/or no PROBATE)

(On Non-judicial Stamp Paper of Rs. 10/-)

DECLARATION CUM INDEMNITY

To,

Company
Address,

Dear Sir (s),

I/We __________________________, son/daughter/wife of Shri ______________________, residing at _________________________________________, hereby solemnly declare:  That Shri/Smt. _____________________, son/daughter/wife of Shri _________________, resident of __________________________________, expired on __________ at _______________ (copy of death certificate), without leaving any will.

2. That the following persons are the only legal heirs of the deceased:

3. That we (all the above legal heirs of the deceased) have not applied for any PROBATE from any Court, either individually or otherwise.

4. That in addition to other assets, the deceased also held ________ Equity Shares of the Company in his/her name, comprised in the Share Certificate(s) No(s).______________.

5. That all other legal heirs have no objection, whatsoever, if the above shares are transferred/transmitted in my/our name and in token of such no objection, they have signed herein below in token of relinquishment of their rights, title and interest in the above shares.

6. That I/We hereby INDEMNIFY the Company (including its officers, successors, assigns etc) to reimburse all cost, expenses and all other financial liabilities, whatsoever, for transferring/transmitting the above shares in my/our name(s) in the above manner, whether or not any other person claims in future, to be the actual beneficiary of the above shares.

Witnessness:

1.

2.

Date:

(Signatures)

[Names and Addresses of the Declarant(s)]

P.S. Identity proof/signature proof of the Declarant(s) to be submitted.

Sample application for transmission of Shares

To,

Date:
The Board of Directors,
Company
Company Address

Sub: Transmission of…….. Equity shares held by Late …………

Ref.: . No.­­­­­­­____________

Dear Sir/Madam,

I have to inform that my father Late …………………. expired on ………………….. He was holding …………. Equity Shares of Rs. 10 each fully paid up in the company under L.F. No. ………….Please find below relevant details of the Equity Shares :

No. Share Certificate No. ……………..
No. of Equity Shares ………………………..
Ledger Folio No…………………………………….
Transferor Distinctive Number…………………..
From Distinctive Number………………………….

To…………………………….  I, hereby submit the following documents for transmission of …………….. Equity Shares in my name:

Copy of the death certificate obtained from ………………,.
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