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Transmission procedure

Max Payne (employed) (2569 Points)

26 April 2010

Hello friends,

Can anyone tell me the board resolutions in case of unlisted public company to give effect to transmission of shares in the event of death of shareholder...

Also could anyone give me the format of Indemnity bond, affidavit and NOC from legal heirs?

Thanks in advance G.k.

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3 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 26 April 2010

PROCEDURE RELATING TO TRANSMISSION OF SHARES

(i) Transmission is devaluation of title by operation of law.

(ii) No instrument of transfer (Transfer Deed) is necessary.

(iii) If there was any lien on the shares or any original liabilities, it would subsist even after transmission.

(iv) A simple application with certain documents such as death certificate, succession certificate, probate, etc., depending upon various circumstances may be sufficient for transmission.

(v) In case of joint holding, the survivor or survivors shall only be entitled for registration and the legal heir of the deceased member shall have no right or claims.

(vi) Dividend declared before the death of the shareholder will be payable to legal representative but dividend declared after the death of a member can be paid to him only after registration of his name and till that period it has to be kept in abeyance.

(vii) Succession certificate is not required when probate or letter of administration is issued.

(viii) Once succession certificate is granted, it provides full indemnity to the company to transmit the shares by operation of law.

(ix) In case of amalgamation, no instrument of transfer is required to be executed.

(x) In case of shares of a private company, if company refuses to register transmission, notice of such intention within two months giving reasons must be sent by the company to the person sending intimation.

(xi) Remedies provided under section 111 are no longer applicable on listed/unlisted public companies.

(xii) New section 111A abrogates the right of the public company to refuse registration of transfer/transmission of share and debenture on any grounds.

(xiii) The companies, after registration of transfer, may approach the Company Law Board/Tribunal for an order of rectification in case the transfer is in contravention of any of the provisions of the Companies Act, 1956 or any other Act.