Transmission of Shares after a Shareholder’s Death
When a shareholder dies, the shares pass to the nominee or legal heirs by transmission under Section 56(2) of the Companies Act, 2013, not by sale. The company registers the change on intimation and must deliver the certificates within one month. We prepare the claim papers, the board resolution and the register entries.
What it is
Share transmission is how shares move to someone else by operation of law, most often when the holder dies. Nobody signs a sale deed and no price is paid. The company records the nominee or legal heir as the new member once it is satisfied about their right to the shares.
Section 56(2) of the Companies Act, 2013 lets the company register a transmission on intimation, without the Form SH-4 instrument that a sale needs. If the shareholder is alive and selling or gifting the shares, that is a share transfer, which follows a different process.
Who it applies to
You were named as nominee
A person named in Form SH-13 can, under Rule 19 of the Share Capital Rules, choose to be registered as holder or to transfer the shares to someone else.
You are an heir and nobody was nominated
Common in older family companies. Say a Ballabgarh trader held shares since the 1990s and never filed a nomination. His heirs prove their right with a succession certificate, probate or letter of administration.
You held the shares jointly
The company’s articles usually recognise the survivor as the holder. Only the deceased holder’s name comes off.
Why it matters
The heir can vote and receive dividends
Until the name is on the register of members under Section 88, the company deals only with the registered holder, so dividends sit unpaid.
The shares can later be sold
A buyer will want the seller registered first, so transmission comes before any sale or buy-back.
Family disputes stay out of the boardroom
A documented transmission tells the board exactly who holds what, before anyone argues about it.
Documents required
About the deceased holder
- Death certificate (attested copy)
- Original share certificates, or the demat account statement
- Copy of the SH-13 nomination, if any
Proof of entitlement
- Succession certificate, probate or letter of administration, where there is no nominee
- Legal heir certificate and no-objection letters from other heirs, where the board accepts them
- Indemnity bond from the claimant
About the claimant
- Transmission request letter
- PAN, Aadhaar and address proof
- Specimen signature and bank details for dividends
How it works
Check the nomination and the articles
We look for an SH-13 on the company’s records and read the transmission clauses in the articles, which decide the documents the board will need.
Write to the company with the papers
The nominee or heir writes to the company with the death certificate, the original certificates and proof of entitlement. A nominee also signs a notice electing to be registered. In practice, a complete first set saves weeks of back-and-forth.
Get the board’s approval
The board verifies the papers and approves the transmission. A private company that refuses must send notice with reasons within 30 days under Section 58(1).
Update the register and issue certificates
The company enters the new member in the register of members and endorses or issues the share certificate in Form SH-1 within one month. Demat shares move through the depository participant instead.
Reflect the change in annual filings
No separate ROC form is filed for a transmission. The new shareholding shows up in the company’s annual return (MGT-7 or MGT-7A).
Timelines
Deliver certificates within one month
Section 56(4)(c) requires the company to deliver certificates within one month of receiving the intimation of transmission.
Explain any refusal within 30 days
A private company refusing to register a transmission must tell the claimant, with reasons, within 30 days (Section 58(1)).
Appeal to the NCLT within 30 or 60 days
The claimant may appeal to the NCLT within 30 days of the refusal notice, or within 60 days of delivering the papers if no notice comes (Section 58(3)).
Transmission vs transfer at a glance
| Transmission | Transfer | |
|---|---|---|
| Trigger | Death, or another event by operation of law | Sale or gift by a living holder |
| Instrument | None; intimation with proof of entitlement | Form SH-4, executed by both parties |
| Stamp duty | Nil, no consideration | 0.015% of the consideration |
| Who acts | Nominee or legal heir | Seller and buyer |
A nominee is not always the final owner. In Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023), the Supreme Court held that a nominee under company law does not become the absolute owner; the shares still pass by succession law. Here is the catch. A Faridabad manufacturer dies holding shares in the family company, with one son named as nominee but a will leaving the shares to all three children. The son can be registered, but he holds the shares for the heirs under the will.
What happens if the company delays
The company pays ₹50,000
Section 56(6) fines the company and every officer in default ₹50,000 for breaching Section 56, including late certificates.
The heir can go to the NCLT
A refusal or silence lets the heir go to the Tribunal under Section 58.
Dividends go unclaimed
Dividends unpaid for seven years move to the IEPF under Section 124. Getting them back means a separate IEPF claim.
Frequently asked questions
What is transmission of shares?
Transmission is the passing of shares to a nominee or legal heir by operation of law, usually on the holder’s death. Section 56(2) of the Companies Act, 2013 lets the company register it on intimation, without any SH-4 transfer deed. No price is paid and no stamp duty applies. Once the board approves, the claimant becomes a member with full voting and dividend rights.
What documents are needed for share transmission?
The core set is the death certificate, the original share certificates and proof of entitlement. A nominee relies on the SH-13 nomination and a signed notice electing to be registered. Heirs without a nomination usually need a succession certificate, probate or letter of administration. The company may also ask for an indemnity bond, KYC documents and no-objection letters from other heirs. We prepare the full set for you.
How long does the company have to complete transmission?
One month. Section 56(4)(c) requires the company to deliver the share certificates within one month of receiving the intimation of transmission. If a private company refuses, it must send notice with reasons within 30 days under Section 58(1). When the papers are complete on the first submission, most boards can approve at their next meeting, well inside the deadline.
Is stamp duty payable on transmission of shares?
No. Stamp duty on securities applies to transfers for consideration, at 0.015% from 1 July 2020. Transmission involves no consideration, so no duty is payable, whether the shares are physical or in demat form. Probate or a succession certificate may carry court fees under state law, but that is a separate cost from the transmission itself, and we will flag it early.
Does the nominee become the owner of the shares?
Not necessarily. Rule 19 of the Share Capital Rules lets a nominee be registered or transfer the shares, so the company can deal with them. But in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023), the Supreme Court held that a nominee does not become the absolute owner. The shares still pass under the will or succession law. A family agreement up front avoids later disputes.
What if there is no nomination and no will?
The heirs prove their right under succession law. Usually that means a succession certificate from the District Judge under the Indian Succession Act, 1925, or a letter of administration. Some boards accept a legal heir certificate with indemnity and no-objection letters for smaller holdings, if the articles permit. We check what your company will accept before you approach the court, so you do not spend on the wrong document.
Is a form filed with the ROC for transmission?
No separate ROC form is filed. The company records the change in its register of members under Section 88 and issues or endorses the certificate. The new holding then appears in the next annual return, MGT-7 or MGT-7A. If the deceased was also a director, the company files DIR-12 within 30 days for the vacancy, which is a separate matter we can handle.
Is tax payable when shares are inherited?
No tax arises on receiving shares by will or inheritance. Property received under a will or by inheritance stays outside the gift-tax rules, as it did under old Section 56(2)(x) of the 1961 Act, and the Income-tax Act, 2025 carries that exemption forward. Tax becomes relevant only when the heir later sells the shares. We can work out the capital gains position when that time comes.
Can the heir sell the shares straight away?
Yes, once registered. A nominee may also choose to transfer the shares directly under Rule 19 instead of being registered first. In a private company, the articles usually restrict transfers, for example through a right of first offer to existing members. The sale then follows the normal SH-4 process with stamp duty at 0.015%. We can plan the transmission and sale together.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
There is no MCA filing fee and no stamp duty on a transmission. Costs that may arise are court fees for a succession certificate or probate, stamp paper for the indemnity bond, and depository charges for demat shares.
Ready to begin?
Tell us which company and how many shares, and we will list exactly what the family needs to file.