Transmission of Shares upon the Death of Demat Account Holder

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Upon the death of a shareholder, it is normal for nominees, legal representatives or surviving joint account holders to seek for transmission of shares. Here is a look at all the details related to the transmission process.

Understanding the Process of Transmission of Shares

It is important to understand the process of the transmission of shares to carry it out successfully. Here are some pointers to help to understand the process:

  • Transmission of shares forms an important part of both estate planning and corporate governance

  • Transmission of shares takes place when a shareholder passes away and their shares have to be transferred to their legal heir.

  • The process of transmission of shares involves a lot of legal formalities.

  • Once these formalities are carried out in the right manner and the documentation is all finalised the transition of ownership happens smoothly.

Legal Requirements for Share Transmission

The transmission of shares has certain legal requirements that need to be fulfilled to carry out the process smoothly. Some of the legal requirements for share transmission include:

  • Share transmission works either per the deceased’s will, inheritance laws, or certain specifications in the company’s articles of association.

  • The prescribed procedure needs to be followed to steer clear of any legal complications

  • When the legal requirements are followed properly the shares are transferred rightfully.

  • Only certain people can apply for the transmission of the shares. These include:

  • By the survivor or survivors if the shares were being held jointly

  • The nominee or nominees (if any) who are listed in the demat account

  • The legal representative if the shares had a sole holder

  • The process itself also requires the right documentation. These include:

  • Shareholder’s death certificate

  • The shareholder’s will or a probationary one

  • Share certificate(s)

  • Letter of indemnity

  • Legal heir or heirs’ affidavit

Procedure for Transmitting Shares in a Demat Account

The procedure to ensure the rightful transmission of shares is discussed below.

  1. Acquiring all Required Documents:

    The very first step to start the process of transmission of shares is to acquire all the required documents. This most importantly includes the shareholder’s certified death certificate copy as it is the only proof of the shareholder’s demise. The death certificate is crucial to begin the transmission process. Other than this, other documents that have been listed above are also required to start the process smoothly.

  2. Review the Articles of Association and Share Transfer Provisions

    The articles of association are rules that govern a company that has been agreed upon by both the company directors and shareholders. If any specific provisions are associated with the transmission of the shares, then they are to be studied too. These provisions list down the procedures to be followed during the transmission. They might also list if there are any specific restrictions or requirements that may apply during the process.

  3. Letter for Transfer of Shares

    A letter with relevant details like the deceased shareholder’s name, the share certificate numbers, the number of shares being transferred as well as the name and details of the legal heir needs to be listed. It is important to remember to address the letter to either the company’s registrar or the share transfer agent, requesting to transfer the shares.

  4. Submission of Documents and Verification

    After the letter for the transfer of shares has been drafted, it, along with all the required documents that have previously been discussed, needs to be submitted to the company’s registrar or the transfer agent. Once the registrar receives these documents, they will verify their authenticity. This is to make sure that each document is legally compliant. Since this is an intensively important process, it will take some time. However, it is important to keep following up with the registrar regularly regarding the same.

  5. Issuing the New Share Certificates
  6. Once all the documents have been verified by the registrar, the deceased shareholder’s share certificate will be cancelled. Post this, new share certificates will be insured in the deceased’s legal heir. These new certificates need to be maintained carefully as they serve as evidence for the change in ownership of the shares.

Role of the Depository Participant in the Transmission Process

Other than the role of the registrar the depository participant or DP also plays a major role in the transmission process.

  • The depository participant or DP helps make sure that all the documents submitted by the legal heir(s) or the legal representative(s) are in order.

  • Once the share transmission process has been approved by the registrar, the depository participant helps transfer the balances to the client account of the legal heir(s).

  • After the transfer of balances has been completed, the duty of the depository participant or DP is to close the account of the deceased.

  • The role of the depository participant or DP mainly centres around the transfer of funds, opening of a new client account for the legal heir and closing the deceased shareholder’s account.

Tax Implications of Share Transmission

  • Capital Gains Tax: Transferred shares may attract capital gains tax based on their market value at the time of transmission.

  • Inheritance Tax: Depending on jurisdiction, inheritance tax may apply to the value of inherited shares.

  • Tax Residency: The tax implications can vary based on the tax residency of the deceased and the inheritor.

  • Documentation: Proper documentation is required to assess and apply relevant taxes.

  • Professional Advice: Consulting a tax professional is essential to navigate complex tax laws and ensure compliance.

Challenges and Common Issues in Share Transmission

During the share transmission process, there are certain challenges or issues that one might face. These include:

  1. Lack of proper documentation: All the documents need to be in place to carry out the transmission process smoothly

  2. Not adhering to legal requirements: Legal requirements cannot be surpassed as ignoring them can lead to serious legal problems.

  3. Issues with share valuation: Having a problem with determining the proper market value of the shares can lead to legal disputes and unnecessary delays.

  4. Potential tax liabilities: It is crucial to understand the tax implications that come with share transmission for both the sender and the recipient else it can lead to major liabilities


The process of transmission of shares after the death of a shareholder comes with many legal procedures. However, these legal procedures are in place to ensure that the transfer process happens smoothly. It is crucial to keep in mind every aspect of the transmission process to avoid any complications or legal issues. It is also essential that those applying for the transmission process seek legal advice and assistance if needed and seek the help of a share transfer agent if required.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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Frequently Asked Questions

What is the role of a nominee in the transmission of shares, and what happens if there is no nominee?

Answer Field

When there is a nominee listed in the demat account of the deceased shareholder, they have the power to apply for the transmission of shares. In case there is no nominee, the transmission process can be taken up by either the deceased shareholder’s surviving joint account holder (in case it's a joint account) or the shareholder’s legal representative if they were the sole account holder.

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