Transmission is the devolution of shares on death or insolvency, as opposed to transfer, which is a voluntary act. The transmission route does not require an instrument of transfer; it requires the proof of death, the succession documents and the company’s registration.
The Nomination Route
A shareholder can nominate a person to whom the shares will vest on death. The nomination is filed with the company in the prescribed form, and the nominee can apply for transmission on the shareholder’s death. The nominee’s title is subject to the rights of the legal heirs, and the nominee holds the shares as a trustee for the heirs unless the nomination provides otherwise.
The Legal-Heir Route
Where there is no nomination, or the nominee is not the sole heir, the legal heirs must establish their title through a succession certificate, a probate of the will, or a letter of administration. The company should obtain the proof of death, the succession document, the identity proof of the heirs and the indemnity, and should register the transmission.
The Documentation
The transmission application should be accompanied by the death certificate, the share certificate, the succession document, the identity proof and the affidavit. The company should maintain the transmission register and update the register of members. The transmission does not attract stamp duty in the same way as a transfer, because it is a devolution, not a sale.
The Practical Discipline
The company should have a clear nomination policy, and the shareholders should be encouraged to file nominations. The transmission process should be documented, and the legal-heir claims should be verified against the succession document. A transmission that is registered without the proper succession proof exposes the company to a claim from another heir.
Call to Action: We advise companies and legal heirs on transmission documentation, nomination and succession proof. For a transmission review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.