SEBI Transmission of Shares – An Overview

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What is the full form of SEBI? The Securities and Exchange Board of India
Benefits of Transmission of Shares

Benefits of transmission of shares include the following:

  • Hassle-Free Ownership Transfer
  • No Stamp Duty Applicable
  • Protection for Legal Heirs
  • Regulatory Compliance Assurance
  • Continued Dividend Entitlement
  • Ownership Security & Stability
  • Seamless Inheritance Process
  • Faster Processing & Resolution
Challenges Faced in Transmission of Shares

Challenges faced in the transmission of shares include the following: 

  • Incomplete or Missing Documents
  • Stamp Duty and Tax Implications
  • Non-Compliance with Company Procedures
  • Legal Disputes and Ownership Claims
  • Delays from Registrar and Depository Participants
Who is eligible for the Transmission of Shares?

The following are eligible for the transmission of shares:

  • Nominee
  • Legal Heir(s)
  • Joint Holder(s)
  • Administrator or Executor of Estate
  • Trustee or Guardian
Documents required for SEBI Transmission of Shares

Various documents are required for SEBI Transmission of Shares, some of which include the following:

  • Signed transmission request form by legal heir or nominee
  • Certified copy of the death certificate of the deceased shareholder
  • Original physical share certificates for verification
  • No Objection Certificate (NOC)
  • Cancelled cheque or bank statement
How can we help you?

As your recovery consultant, Enterslice can help you with the following:

  • Assistance for filing transmission of shares application
  • Expert guidance throughout the process of transmission of shares
  • Helping collect documents throughout the process of SEBI transmission of shares
  • Legal guidance and support to deal with complexities
  • Assistance in preparing the transfer deed

Enjoy Timely Transmission of Shares with Enterslice Experts

Smooth transmission of shares guaranteed with 100% legal compliance & seamless ownership transfer!

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What is SEBI Transmission of Shares?

SEBI transmission of shares is the transfer of shares to the legal heir or nominee without any consideration in case of the original shareholder's demise.

The Securities and Exchange Board of India (SEBI) outlines the process for seamless transmission of shares to ensure a simplified process for investors. However, legal heirs must submit the required documents to the company's registrar or depository participant, such as a death certificate, succession certificate, or probate of the will.

If the securities value is up to ₹5 lakhs, SEBI permits the transmission of shares with minimal documentation. This process streamlines the ownership of share transfers, safeguarding investor rights while maintaining market transparency and efficiency.

100% Legal and Regulatory Compliance Assurance

Processing with Minimal Documentation for ₹5 Lakh Limit

Dedicated Agent Support for Hassle-free Transmission

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Challenges Faced During Transfer and Transmission of Shares

The transfer and transmission of shares is a legal process that involves adherence to the procedures. However, the process involves documentation challenges, which causes process delays, conflicts, and compliance issues for shareholders. Let us explore the challenges below:

Incomplete or Missing Documents

Incomplete or Missing Documents

If important documents, such as the death certificate, succession certificate, or probate, are missing, the process is delayed. Documents are required for legal verification, and additional paperwork may be required to process the transmission of shares requests.

Stamp Duty and Tax Implications

Stamp Duty and Tax Implications

Incorrect stamp duty payments or tax liabilities on share transfers cause monetary obligations, mandating compliance with SEBI regulations and state laws to avoid penalties or rejections.

Legal Disputes and Ownership Claims

Legal Disputes and Ownership Claims

Suppose the transfer of shares and transmission of shares are entangled in court battles over ownership conflicts by legal heirs or nominees. In that case, the process may get delayed until a clear legal verdict is obtained.

Non-Compliance with Company Procedures

Non-Compliance with Company Procedures

Every company has particular conditions for the transmission of shares. However, failure to meet the specific guidelines results in the rejection of claims, which demands modifications and submissions.

Delays from Registrar and Depository Participants

Delays from Registrar and Depository Participants

If registrars or depository participants take time to clear the verification processes, it increases the wait time, affecting beneficiaries in accessing their share and dividend entitlements.

Procedure for Transfer of Shares and Transmission of Shares

The procedure for the transfer and transmission of shares facilitates the legal transfer of ownership through proper documentation. The process does not require stamp duty compliance. However, it mandates company approval to safeguard the rights of the shareholders in adherence to the regulations of the Companies Act, 2013. Process for transfer of shares and transmission of shares includes:

Obtain and Execute the Transfer Deed

To initiate the process for transmission of shares, claimants must fill out and sign Form SH-4. It requires the transferor and transferee to execute and sign a transfer deed. However, when shares are transferred by government entities, financial institutions, or as security deposits, Form SH-4 may not be required. However, for debentures, Form SH-4 can be substituted with a standard instrument of transfer.

Register the Transfer with Relevant Documents

Once the transfer deed is executed, the next step in the process is to register it with the company in line with the Articles of Association (for shares) and trust deed (for debentures) that must necessarily permit the transfer. It is also important to furnish a share certificate or allotment letter for verification. In case the shares transferred are partly paid, the company must notify the transferee of pending dues (if any), which, in turn, requires NOC confirmation from the transferee within two weeks before proceeding with the registration.

Pay and Cancel Stamp Duty

According to the Indian Stamp Act, paying the stamp duty is mandatory before submitting the transfer deed. While the applicable stamp duty rate comprises 25 paise per ₹100 of the share value, it is essential to confirm that the affixed stamp on the transfer deed is cancelled at the time of or before signing to ensure the legality of the transaction. However, stamp duty rates and applicability depend on the regulations and rules of the particular states.

Registration of Transfer or Transmission

Once the verification is conducted successfully, the company registers the transfer of shares and transmission of shares and updates its records accordingly. Companies listed on a recognized stock exchange are not eligible to charge fees on share transfers. However, for partly paid shares, the company holds the registration process until the transferee offers an NOC (no-objection certificate) within two weeks of obtaining Form SH-5 from the company.

Timeline for SEBI Transmission of Shares

The SEBI transmission of shares is a stepwise process that follows a structured timeline. However, it is essential to ensure that legal heirs or nominees obtain their rightful ownership through a streamlined process within the stipulated timeline.

Submission of Request: 7 to 10 Working Days

Beneficiaries such as legal heirs or nominees are mandated to fill out the transmission request form and submit it along with the necessary documents, including the death certificate of the original shareholder and succession certificate. These details must be submitted to the company's registrar or depository participant and take 7 to 10 working days to complete.

Verification of Documents: 10 to 15 Working Days

Once the transmission request is submitted, the company reviews the form and the submitted document to validate its authenticity and adhere to SEBI regulations to initiate the transmission process.

Approval and Processing: 7 to 14 Working Days

Once the documents are verified, the registrar/depository participant takes the transmission of shares request forward and updates the records to reflect the new shareholder details. The process takes 7 to 14 working days.

Issuance of New Share Certificate: 7 to 10 Working Days

Once the above steps are complete, a new share certificate is issued in the name of the beneficiaries - legal heirs or nominees. This step takes 7 to 10 working days to complete.

Final Confirmation and Access: 3 to 5 Working Days

The beneficiaries, including legal heirs and nominees, obtain official confirmation and acquire complete ownership rights, including dividend entitlements and shareholder privileges.

Documents Required for SEBI Transmission of Shares

Various documents are required for the SEBI transmission of shares. However, the documents required are based on whether or not the shareholder is deceased or whether the shares need to be transferred for other reasons. The list of documents includes the following:

Signed transmission request form by legal heir or nominee

Certified copy of the death certificate of the deceased shareholder

Succession Certificate/Probate of Will/Letter of Administration to confirm legal rights

Original physical share certificates for verification

Duly notarized indemnity bond

Notarized affidavit by legal heir or nominee

KYC documents - PAN & Aadhaar card, passport of legal heir/nominee

No Objection Certificate (NOC) – From other legal heirs

Cancelled cheque or bank statement

Who is Eligible for SEBI Transmission of Shares?

SEBI transmission of shares is the process of transmitting shares to the legal heirs, nominees or joint holders owing to the death or incapacity of a shareholder. The following are eligible for the transmission of shares:

  • Nominee: A registered nominee with the company is eligible for direct transmission of shares once the required documents are submitted.
  • Legal Heir(s): If the nominee's name is not mentioned, legal heir(s) are eligible for transfer and transmission of shares after establishing their identity through a succession certificate, probate of will, or letter of administration.
  • Joint Holder(s): In the case of joint holders, the surviving joint holder(s) automatically become eligible for transmission of shares upon the death of one holder.
  • Administrator or Executor of Estate: In case a will is present, the executor initiates the transmission of shares on behalf of the legal heirs.
  • Trustee or Guardian: Minors who inherit the shares are eligible for SEBI transmission of shares. However, until they attain maturity, a legal guardian or trustee may hold the shares on their behalf.
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Stress-free Transmission of Shares

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Benefits of Transmission of Shares

The transmission of shares is a process of transferring share ownership to legal heirs, nominees, or joint holders hassle-free and without stamp duty. It streamlines succession, safeguarding the rights of shareholders and maintaining adherence to legal regulations. Benefits include the following:

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Hassle-Free Ownership Transfer

One of the most significant benefits of the transmission of shares is the hassle-free and seamless transfer of shares to eligible people, including legal heirs or nominees, without the need for sale or a standard transfer process.

No Stamp Duty Applicable

While share transfers require stamp duty, SEBI transmission of shares does not mandate the need for stamp duty, which, in turn, relieves the financial burden on beneficiaries.

Protection for Legal Heirs

Transmission of shares protects the rights of legal heirs and nominees appointed by the shareholders, facilitating conflict-free rightful ownership.

Regulatory Compliance Assurance

As per SEBI transmission of shares aligns with its regulations as well as the provisions of the Companies Act, facilitating a legally valid and transparent transmission procedure.

Continued Dividend Entitlement

Beneficiaries of the transfer and transmission of shares enjoy continued dividends and bonuses related to the shares without any disruptions.

Ownership Security & Stability

The process of transfer of shares and transmission of shares prevents fraud and unauthorized claims, facilitating rightful succession and maintaining shareholder value and investment security.

Seamless Inheritance Process

SEBI transmission of shares streamlines the inheritance process by eliminating the intricacies of share sales.

Faster Processing & Resolution

Requests for transfer of shares and transmission of shares are processed promptly. Companies usually process these requests within 30 days, facilitating fast ownership transfer to the rightful claimants.

Prerequisites for Transmission of Shares

Have a look at the prerequisites for transmission of shares-

  • Obtaining Death Certificate :- It is mandatory to obtain the death certificate of the original shareholder to initiate the transmission of shares process.
  • Checking Nominee or Legal Heir Status :- Validating the nominee details or obtaining a succession certificate is mandated for the process.
  • Gathering Essential Documents :- Collecting important documents, such as PAN card, share certificates, and proof of legal heir, is important.
  • Submitting Transmission Request :- It is necessary to apply to the company’s registrar or depository participant to initiate the transmission request.
  • Ensuring Compliance with Regulations :- Following the process in line with SEBI regulations and company-specific guidelines for approval is a must.

Why is the Transmission of Shares Important?

Transmission of shares is essential to ensure seamless ownership transfer once the shareholders pass away. This process facilitates legal heirs or nominees to claim the shares that are rightfully theirs without legal conflicts. The process of transmission of shares aligns with SEBI regulations, averting delays or monetary losses. Transfer and transmission of shares offer beneficiaries access to dividends, voting rights, and corporate benefits. This process helps avoid hurdles emerging from unclaimed shares and inactive accounts.

If shares are not transmitted on time, they may be locked, impacting liquidity and asset management. Compliance with the transfer of shares and transmission of shares aligns with compliance requirements, enabling legal heirs to safeguard their inheritance. It also helps them maintain their shareholding rights uninterrupted, assuring financial soundness and safety.

Services for Transmission of Shares Offered by Enterslice

Have a look at the services for transmission of shares offered by Enterslice-  

  • Assistance for filing transmission of shares application  
  • Expert guidance throughout the transmission process
  • Helping collect documents throughout the process
  • Paperwork support to ensure timely verification during the process
  • Liaising with officials for status updates
  • Legal guidance and support to deal with complexities
  • Compliance assistance with SEBI transmission of shares
  • Delivering operational and fee payment clarity  
  • Assistance in preparing the transfer deed
  • No Objection Certificate (NOC) assistance
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Why Trust Enterslice for Transmission of Shares Services?

Enterslice has over 10 years of experience in managing the transmission of shares. Our dedicated team is professional in its approach and committed to ensuring seamless transmission of shares. We help expedite the verification process to facilitate on-time transmission. We have the expertise in dealing with complex cases and offer legal support in all such matters.

Let us explore the reasons why we are the most trustworthy consulting firm for Transmission of Shares services:

  • 10+ Years of Industry Experience in Transmission of Shares
  • Helped over 500 Clients with SEBI Transmission of Shares
  • Offer Expert Guidance to Clients throughout the Process    
  • A Healthy Network of 300+ Professionals
  • Delivered Services in Over 10,000+ Pin Code within India  
  • Facilitate Compliance with SEBI and the Companies Act  
  • Reliable Agents to Handle Each Case
  • Assistance with Paperwork Collection
  • Quick Turnaround Time of 30%
  • Ensuring On-Time Transmission of Shares

Frequently Asked Questions (FAQs) on Transmission of Shares

Transmission of shares refers to the process of transferring share ownership owing to the death, insolvency, or lunacy of a shareholder. The process involves the transmissions of shares to the beneficiaries of the shareholders, including legal heirs or nominees in line with the compliance requirements of SEBI and Companies Act. The whole process follows a legal approach.

A transmission form is a formal document submitted by the beneficiaries of the shareholders, including legal heirs or nominees. The aim of the transmission form is to formally request the share transmission. This form outlines the details of the deceased shareholder and successor, as well as required documents, including a death certificate, succession certificate, or probate to legally transfer shares.

The Companies Act 2016 is the outcome of the bill that amended the Companies Act, 2013 in terms of structuring, disclosure and compliance requirements for companies. According to the Companies Act 2016, the transmission of shares materialises automatically upon the shareholder’s death or insolvency. However, the legal heir or nominees are mandated to submit the required documents to the company or depository to initiate the ownership transfer without executing a transfer deed.

The turnaround time (TAT) to process death claims depend from one company to the other. However, once the beneficiaries of the original shareholders submit all the necessary documents, including the death certificate, succession proof, and indemnity bond, the process is initiated, which then takes 30 to 60 days to complete.

While transfer and transmission of shares appear to be the same, but there is a clear difference between the two. While transmission of shares is initiated owing to the death, insolvency, or lunacy of the original shareholders, it requires legal documentation but no consideration. However, on the other side, transfer of shares is a voluntary activity between two parties involving consideration and execution of a transfer deed.

Companies are mandated to complete the process of transmission of shares within the stipulated time period. However, if any company fails to process the share transmission request within the prescribed period, it is liable to face penalties under the Companies Act. These penalties include fines on the company and concerned officers, ranging from ₹10,000 to ₹50,000 or more.

In case a Demat account holder dies without naming a nominee, legal heirs are eligible to submit a succession certificate, will, or probate to claim the securities. However, the beneficiaries must adhere to the compliance requirements, and the procedure to initiate the process must be followed. After the depository or the company validates the documents, share transfer to the rightful heirs is processed.

One significant case law for transmission of shares is that of Sulochana Nathany v. S.K. Roy (2004), wherein the court ruled that companies should oblige the share transfer to the legal heirs once they furnish valid proof of their identity. This case facilitated the protection of investor rights.

Understanding different types of shares is important for investors, wherein each category of shares offers unique rights, benefits, and financial advantages to the investors. The four main types of shares include the following:

  • Equity Shares – These are ordinary shares that give shareholders voting rights and facilitate their ownership in the company. However, the dividends on these shares depend on profitability of the company and decisions of the board.
  • Preference Shares – These shares facilitate shareholders in receiving fixed dividends ahead of equity shareholders. However, preference shareholders have either limited or no voting rights in company decisions.
  • Redeemable Shares – Redeemable shares are those shares which are issued with a predetermined redemption period. These shares can be repurchased by the company after a specific time period.
  • Bonus Shares – Bonus shares are free additional shares that are issued to existing shareholders from company reserves. These shares boost the shareholding without added investments.

As transmission of shares is an involuntary transfer of shares initiated upon the death or insolvency of the shareholders to the beneficiaries such as legal heirs and nominees, it does not incur any stamp duty. However, unlike transmission, the voluntary share transfer attracts stamp duty.

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