- Transmission of shares is a process by operation of law whereunder 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.
- If the shareholder has signed the Nomination Form and lodged with the Company and the Company has taken it on records, then with a copy of the death certificate produced before the Company, the Company can transmit the shares to the nominee.
- Transmission of shares takes place when registered member dies or is adjudicated insolvent or lunatic by competent court.
- Article of the Company usually provide the provisions of Transmission of shares. In absence of such provisions, Company will follow Regulations 23 to 27 of Table F of the Companies Act, 2013 to govern the provision of Transmission of shares.
- Legal representatives are entitled to the shares held by the deceased person and company must accept the evidence of Succession.
- Succession Certificate, Letter of Administrations, Probate and
any Evidence as required by Board of Directors to their
satisfaction is evidence of succession
- Succession certificate is a document issued by a competent court (civil) certifying a rightful person to be the successor of a deceased person.
- In case of small shareholders transmission 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.
- The Board upon receiving and reviewing all documents the documents to its satisfaction approve the transmission of shares in favour of successor.
- No stamp duty to be paid in case of new share certificates is being issued to new shareholder by virtue of transmission.
- The process for transmission of share should be completed within thirty days by the company.
We believe that all founders, angel investors and other individual shareholders should file the Nomination Form (SH-13) with the Companies where they have their investments, since obtaining a succession certificate is a long arduous process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
