When a shareholder passes away, their shares do not automatically transfer to their family members. The legal process to formally transfer ownership to the legal heir or nominee is called **"Transmission of Shares"**.
Unlike a regular transfer (sale/purchase), transmission is not a voluntary act but a legal consequence of death. This critical difference means the documentation requirements are stricter.
Scenario 1: With Nomination
If the original shareholder had registered a nominee, the process is relatively simpler. The nominee needs to submit:
- Death Certificate (Notarized or Attested)
- Transmission Request Form (ISR-5)
- Client Master Report (CML) of the nominee's Demat account
Note: Being a nominee makes you a "trustee" of the assets. In some disputes, legal heirs can still claim rights over the nominee.
Scenario 2: Without Nomination
This is where things get complicated. If no nominee was registered, the company will ask for legal proof of inheritance. The requirements depend on the value of the shares:
A. Small Value (Usually < ₹5 Lakhs)
Companies may allow transmission without a court order if you provide:
- Indemnity Bond
- Affidavit from all legal heirs
- No Objection Certificate (NOC) from other heirs
B. High Value (> ₹5 Lakhs)
For higher value holdings, companies generally insist on a **Succession Certificate** or **Probate of Will** issued by a competent court. Obtaining these court orders can take 6-12 months.
Why You Need a Demat Account
According to SEBI regulations, physical shares cannot be transmitted directly in physical form. The legal heir **must** open a Demat account. The transmission process will result in the shares being credited electronically to this account.
At Ekvam Associates, we assist families in obtaining the necessary legal documents (like Succession Certificates) and coordinating with the companies to ensure smooth transmission.