TRANSMISSION OF SHARES IN LISTED AND UNLISTED PUBLIC COMPANIES

In the last two years not only India, but the whole world also faced a huge death rate due to only one reason, even my family being victim of that one. But the concern of this write-up is not the reason for COVID-19, though our purpose is to help you in smooth Transmission of Shares This write-up will help you in the assignments related to the transmission of shares in case of the death of the subscriber of the shares of a company. Moving Ahead we will aptly discuss for Transmission of Shares in India.

In the very first point, I begin with the case of private companies since there are minimal compliances in comparison to Public & Listed companies. Initially, the legal heir or successor will write an application to the company and its officers for Transmission. On receipt of the same, Company will hold a Board Meeting to pass a resolution to give effect to the said Transmission.

Once the Board has approved the request for transmission, the authorized person will pass the entry on the back side of the Share Certificate for transmitting the shares in the name of the legal heir or successor. Pass the entry in the Register of Members. The entire process is complete in this way.

Moving ahead to the main subject, In the case of Unlisted Public companies, the following steps are required to be taken for the Transmission of Shares.

TRANSMISSION OF SHARES IN CASE OF UNLISTED PUBLIC COMPANIES

In cases where the deceased was holding shares in physical format, the application for shares transmission is submitted to the company and the company will forward the application to RTA (Registrar and Transfer Agent). This application will contain the following supporting documents:

  1. Affidavit for claiming ownership in shares by legal heir or nominee.
  2. Declaration or NOC from remaining legal heirs for claiming ownership of shares. 
  3. Indemnity bond by the successor, if no will or legal heir certificate is present.
  4. Signature Card attested from Bank.
  5. Self-attested copy of PAN of the legal heir (s)
  6. Original Share Certificates for endorsement.
  7. Application cum Covering Letters.

Note: For Draft copies of the above documents you can mail us @ csannusharma@gmail.com

EXECUTION OF SHARE TRANSMISSION

Once the above set of documents is approved by RTA and Certificates are endorsed, the Legal heir can collect documents from RTA and apply for Dematerialization of shares.

The set of documents from RTA can receive through courier as well. The legal heir must have a Demat account to apply for dematerialization of physical shares acquired via transmission. Meanwhile, this activity is completed; Unlisted Public Company will pass a board resolution to give effect to the said resolution. Register of Members must be updated by the registered RTA of Unlisted Public Company.

Form PAS-6 and MGT-7 will reflect the changes held in the shareholding pattern. For filling Reconciliation of Share Capital Audit, RTA will share an updated list of shareholders half-yearly.  

TRANSMISSION OF SHARES IN CASE OF LISTED COMPANIES

The procedure for the Transmission of shares is very different in the case of listed companies in Comparison to unlisted Public Companies.  Where physical share certificates are involved in the case of Unlisted Companies, Demat account is transmitted in case of Listed Companies, and all the holding of each company are straightway transmitted in the name of Legal Heir.

For better understanding- let’s take an example: Mr. Z was holding 4 shares of 4 different companies through his Demat Account. After his death, Legal Mr. A will apply for transmission of Demat Account in his own name and all the securities held by Mr. Z will be automatically acquired by Mr. A.

Unlike Unlisted Public Companies, a Legal heir doesn’t need to approach every company separately. In case the deceased was holding multiple Demat Accounts with different Brokers or DP, In that case, only the legal heir needs to approach every DP separately.

The broker or DP only provides the form of application regarding transmission, as every company has its own format. An application for transmission will be different in each case as the case may be. But some standard documents shall remain the same.

  1. Copy of will or Legal heir certificate if any.
  2. Affidavit for claiming ownership in shares by legal heir or nominee.
  3. Declaration or NOC from remaining legal heirs for claiming ownership of shares. 
  4. Indemnity bond by the successor, if no will or legal heir certificate is present.
  5. Signature Card attested from Bank.
  6. Self-attested copy of PAN of the legal heir (s)
  7. Application cum Covering Letters.

CASES WHERE THE DECEASED WAS HOLDING SHARES OF LISTED COMPANIES IN PHYSICAL FORM

There are some cases as well, where people hold physical share certificates of listed companies. These shareholders must have acquired shares before listing the company.

In these types of cases, the Transmission process will remain the same like Unlisted Public Companies. The legal heir first needs to approach RTA for endorsing share certificates. By endorsing here we mean that a legal heir or successor will become a shareholder in place of a deceased family member.

The list of standard documents with applications shall remain the same. Also, the legal heir can approach DP to transmit the shares in his own existing Demat account. For this purpose, the legal heir needs to submit his Client Master Report (CMR) to the DP or broker of the deceased family member.

Draft Board Resolution for Transmission of shares in India

APPROVAL FOR TRANSMISSION OF SHARES HELD IN THE NAME OF lATE MR. GOPAL.

RESOLVED THAT pursuant to the provisions of Section 56 and other applicable provisions, if any, of the Companies Act 2013, (Act) and rules made thereunder (including any statutory modification or re-enactment thereof for the time being in force) and the request for transmission of shares received along with the relevant documents, the transmission of 1,07,200 equity shares of Rs.10/- each be and are hereby allotted in favor of Shri Ashutosh Bajoria as the legal representatives of the deceased member.

The deceased was holding 107200 equity shares of QWER Industries Limited as the following description:

Folio No.Certificate No(s).Distinctive Nos.(from-to)Shares
002005800113000 5,000
 0061300114000 1,000
 0071400115000 1,000
 19079997017999800 100
 17579706017970700 100
 07631000003200000 1,00,000

RESOLVED FURTHER THAT Directors/ Managing Director of the Company be and is hereby authorized to do all acts and take all such steps as may be necessary, proper, or expedient to give effect to the resolution described above.”

REFERENCES

  1. https://www.um.edu.mt/library/oar/handle/123456789/6869
  2. https://www.um.edu.mt/library/oar/handle/123456789/72647

By csannusharma

Annu Sharma is a qualified Company Secretary as well as a Certified CSR Professional and a Law graduate with rich experience of 4 years in secretarial, corporate legal affairs, management and corporate governance; in different industry sectors. Featured on Tax Guru.In, Compliance Calendar LLP and Blogger.com.

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