Are your holding physical share certificate of the deceased shareholder? Confused, what to do with share certificate left behind by deceased shareholder?
If you are holding the physical share certificate of deceased shareholder then it is quite often that many dubious questions must have arisen in your minds such as how to get that share certificate issued in the name of legal heir or nominee. Are those certificates just papers having no value? Those physical share certificate lying with you are not worthless paper. Those share certificate can be transferred in the name of the legal owner.
Companies Act clearly demarcate between Transfer and Transmission of Shares.
Transfer of Shares: Transfer of shares refers to the transfer of title to shares, voluntarily by one party to another.
Transmission of Shares: Transmission of shares means transfer of title to shares by the operation of law i.e insolvency, death, lunacy, inheritance of the member.
HOW TO GET NAME CHANGE ON SHARE CERTIFICATE OF DECEASED FAMILY MEMBER
If you are in custody of physical share certificate of deceased family member, you should get name changed on those certificates to become legal owner of such share certificate.
If share certificate remains in the name of deceased holder, it cannot be sold until transfer of such shares in the name of new legal owner.
Check whether shares were held singly or jointly, in case of jointly holding, shares will get transferred in the name of joint holder. On the other hand, shares were held in single name, these shares will get transferred in the name of the nominee.
PROCEDURE TO NAME CHANGE ON SHARE CERTIFICATE OF DECEASED
- Initially Check legal status of company whether the company still exist or there has been name change or taken over or under liquidation or merged with another company.
- After the preliminary check is done written application for name change shall be made to the Registrar and Transfer Agent or to the Share Department of the company.
- Joint holder if any, should sign request letter.
- After examining the documents, company will issue a physical share certificate in the name of (nominee, joint holder, legal heir)
DOCUMENTS TO BE SUBMITTED WITH APPLICATION FOR TRANSMISSION OF SHARE
- Physical share certificates
- Transmission request form
- Death certificate of the deceased
- PAN Card of successor
- Bank attested signature of successor
- Proof of address of the successor
- any other documents as may be required by the company
Who is legal Heir?
The property of deceased dying intestate or without will, would be given to legal heirs. Hindu Succession Act, 1956 defines the order and the person who will become legal heir of deceased. For eg. In case husband dies, his wife, son’s, daughter’s will become his legal heir.
ROLE OF COURT IN CASE OF TRANSMISSION
In case shareholder dies without leaving a will and the value of shares exceeds Rs 2 Lakhs then succession certificate shall be required. In other words, if the value of the physical share is less than Rs 2 Lakhs (Less than Rs 5 Lakhs in case of demat) then succession certificate is not required. This is certificate granted by the court to the legal heir of person dying intestate. This succession certificate enables the heir to make payment of debt and to get security transferred in his name.
In order to obtain succession certificate, petition needs to be filed with Court along with the following information:
- The name and relationship of the person requiring this certificate.
- Names of all heirs and close relatives of the deceased,
- Details about the time, date and place of death should be mentioned in the application.
- Copy of the death certificate need to be filed along the application.
- Details of all movable and immovable properties for which Certificate is sought.
Once the application for succession certificate is filed, the Court will issue notice to all the legal heirs and close relatives, so that anyone having any objection in the grant of Succession Certificate in favour of Applicant can raise objection.
Court also publish the notice for application of Succession certificate in the newspaper to inform the public at large and if anybody having any concern can raise an objection. If no one contests the application on the expiry of this period, the court passes an order for issuance of succession certificate and if any objection is raised, the Court will first decide the objections and then proceed further. Generally, it takes 4-6 months to get succession certificate from the court.
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