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Deceased director shareholdings distribution

Raj S ( ) (24 Points)

01 October 2019

There are 3 directors for a Private Company. 2 Directors are holding 60% and 40% shareholdings in the company and the company is pretty small with a turnover less than Rs.30 lakhs. The Director of this private company who has 60% share holding has passed away in Jan 2017. Resignation of the deceased director has been filed. Also, FYI – all the three directors are part of one family (husband, wife and daughter), the deceased director is the wife. Can you please help with the following-

In order to distribute the deceased director shareholding to the 2 live directors, is it sufficient to pass a resolution in the Board and distribute the holdings accordingly? Please help…

Can you please guide for both scenarios where the deceased director with WILL (not registered) and with out WILL?

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2 Replies

Jatin Bajaj (CS) (2928 Points)
Replied 01 October 2019

Usually the death of the holder of the shares results into the transmission of shares. Transmission of shares arises out of operation of law. The legal heir of the decesased person shall submit the application to the Company.

1. Probate/ will

2. If there is no will then succession certificate

3. letter request to the Company for transmission of shares

4. copy of death certificate.

on the complete verification of documents by the Company, Company shall transmit the shares in favour of successor of deceased within 30 days of receipt of documents from the Company and such transmission shall be taken on records by the Company in the Board meeting. Specific board resolution is not required.

and such transmission shall be recorded in the register of Members.

Raj S ( ) (24 Points)
Replied 01 October 2019

I really appreciate your prompt response Jatin sir. Can you please clarify the below concerns-

Is a will written or instructed and signed by the deceased person under the presence of 2 witnesses is sufficient or does the WILL needs to be registered?
Also as mentioned the 3 directors are husband, wife and daughter; of them the wife director has passed away. So, would there be any relaxation in transmission of shareholding – can it be done without a WILL or a succession certificate (when checked with one of the lawyer for succession certificate – he said court is taking a very long time to issue the succession certificate)
When you say “such transmission shall be recorded in the register of Members”, is there any particular form that needs to be filed with the ROC or any other relevant department?
And to do this transmission of shareholding is there any particular time frame from the deceased date of director.
As you may know the department is constantly changing lot of things especially in the last 2 years. So, can the transmission be done at a later date after filling the Company tax return and other Financials for FY 2018-2019?

Thanks