Transmission of share means transfer of title to shares by operation of law. This type of situation arises when a shareholder died, inheritance, bankruptcy, marriage and succession.
On death of the shareholder, legal heirs are required to submit a request letter supported by an attested copy of the death certificate of the deceased shareholder and the relevant share certificate.
On transmission of shares, the person to whom shares are transmitted became the new registered shareholder of the company and is entitled to all the rights and subject to all liabilities as such shareholder.
Execution of transfer deed not required in case of transmission of shares. Transmission will be registered by a company in the registrar of members.
Provisions related to transmission of shares are specified in section 56 of Companies act 2013. As per section 56 (4) of companies act 2013, 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 transmitted within a period of one month from the date of intimation of transmission under sub-section (2) in case of transmission of securities.
Following documents are required to accompany the application to transmission by the legal representative;
- Certified copy of death certificate
- Request for transmission signed by the legal heir(s) / Legal Representatives /claimant(s)
- Succession certificate or Letter of Administration or Probate of Will;
- Original Share Certificate
- Specimen signature of the successor (s)
If probate is produced along with the application then succession certificate is not required.
On the basis of application, company record the particulars of death certificate and if everything found to be ok then the company shall approve the transmission request and register shares in the name of the survivor or legal heir as the case may be.
In case the company is not satisfied then within 30 days from the date on which the intimation of transmission is delivered, the company shall communicate such refusal to the concerned person.
The company may require documentary evidence to prove the identity of the legal heir or other claimants, such as PAN Card, Passport, Ration Card, Voter’s Identity Card, etc.
In case of joint holders, the survivors of joint holding can get the shares transmitted in their names by production of the death certificate of the deceased holder of shares.
In case the deceased person is holding shares in more than one company the legal heirs has to follow the same procedure with each of the companies by submitting all required documents along with death certificate and share certificate.
Where any default is made in complying with the provisions of Section 56 (1) to 56 (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 – Section 56(6).