When a shareholder passes away, their shares do not automatically transfer to family members. Whether the shares are held in physical form or Demat form, a proper legal process must be followed to transfer ownership to the rightful heirs.
Shares are treated as movable property. After death, they can be transferred only:
- • To the nominee, or
- • To legal heirs as per succession laws
Types of Shareholding & Impact on Transfer
1. Shares Held in Single Name (With Nominee)
- • Shares are transmitted directly to the nominee
- • Legal heirs’ consent is generally not required
2. Shares Held in Single Name (No Nominee)
- • Legal heirs must submit succession documents
- • Process depends on the value of shares and company rules
3. Shares Held Jointly
- • Shares are transmitted to the surviving holder(s)
- • Death certificate is required
Transmission of Shares Without a Will
If the shareholder died intestate (without a will):
- • Legal heirs must establish their claim
-
• Companies may ask for:
- o Succession certificate, or
- o Legal heir certificate + indemnity (for lower value shares)
Transmission of Shares With a Will
If a valid Will exists:
- • Shares are transmitted to beneficiaries named in the will
- • Probate may be required depending on jurisdiction