Reg. transmission of shares

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pnayal

pnayal (Querist)
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14 November 2012 Please let me know the procedure for transmission of shares.

Ajay Mishra

Ajay Mishra (Expert)
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16 November 2012 Hi

Requirement of documents for transmission of shares:

Where title to shares comes to vest in another person by operation of law, it is not necessary to execute and submit transfer deed. A simple application to the company by a legal representative along with the following necessary evidences is sufficient:—

(i) Certified copy of death certificate;
(ii) Succession certificate;
(iii) Probate;
(iv) Specimen signature of the successor.

However, requirement of these certificates is not essential and depends on various circumstances of the case. Where a succession certificate has been granted in respect of shares, the company cannot insist on the production of probate or letters of administration; the certificate affords full indemnity to company. [Thenappa Chettiar v Indian Overseas Bank Ltd. (1943) 13 Comp Cas 202 (Mad)].

Since the transmission is by operation of law, neither consideration for transfer nor stamp duty is required on instruments for transmission.

Ajay Mishra

Ajay Mishra (Expert)
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16 November 2012
Procedure for transmission of shares

(i) The survivors in case of joint holding can get the shares transmitted in their names by production of the death certificate of the deceased holder of shares. The company records the particulars of the death certificate and a reference number of recording entry is given to the shareholder so as to enable him to quote such number in all future correspondence with the company.
(ii) If a member of a company dies and he leaves after him a will or letter of administration then the survivors shall get a copy of 'will' certified under the seal of a Court of competent jurisdiction. The certified copy of the will is called a 'probate' and it shall be forwarded to the company.
(iii) If a member of a company dies without leaving a will, then succession certificate issued by a Court of competent jurisdiction shall be submitted to the company.
(iv) In case a member of a company becomes bankrupt, the official receiver shall produce documentary evidence of his appointment from a competent Court.

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Ajay Mishra

Ajay Mishra (Expert)
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16 November 2012

Execution of transfer deed not required in case of transmission of shares:

Section 108(1) of the Act states that nothing in section 108 shall prejudice any power of the company to register as holder of shares or debentures any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law. It is not necessary to have any instrument of transfer executed for the purpose of transmission of shares.
Where title to the shares comes to vest in another person by operation of law, it is not necessary to submit transfer form. [Life Insurance Corpn. of India v Bokaro & Ramgur Ltd. (1966) 36 Comp Cas 490 (Del].
The procedure provided under sections 108 to 111 is not applicable to transmission of shares by order of a Court. [Hanuman Mills (P) Ltd., In re (1977) 47 Comp Cas 644 (All)].
However, Regulation Nos. 25 to 28 of Table A in Schedule I to the Act contains some regulations dealing with transmission of shares which are generally found in the Articles of most companies. On registration of the transmission of shares, the person entitled to such transmission becomes the shareholder of the company and enjoys all rights and liabilities of a shareholder.