If you are stuck in such a situation, here is what to do.

Mr. Sameer, a resident of the city of Anandpur, recently faced a distressing situation. His father, Mr. Prakash, had passed away over a decade ago. While organizing his late father’s financial documents, Sameer discovered shareholding statements from a brokerage firm, “Premier Wealth Management.” His mother was clearly named as the nominee in the records. When the family approached Premier Wealth to initiate the transmission of shares, they uncovered a perplexing issue. Records showed that about three years after Mr. Prakash’s death, the entire holding was transferred to a different brokerage house, “Capital Growth Brokers.” This transfer, which occurred posthumously, raised immediate red flags. Now, Capital Growth Brokers is stalling the transmission process, citing procedural discrepancies. Sameer’s family is left wondering how such a transfer was even possible and what legal path they must take to secure their rightful inheritance.

Advice in such cases

Dealing with the transmission of securities after the death of a family member can be complicated, especially when unexpected issues arise. Here is some general advice:

• Gather all relevant documents immediately. This includes the death certificate, the deceased’s DEMAT account statements, any nomination forms, and the KYC documents of the nominee or legal heirs.
• Communicate with the Depository Participant (DP) or brokerage firm and the company’s Registrar and Transfer Agent (RTA) only in writing. Maintain a clear record of all emails and letters sent and received.
• Do not sign any documents without fully understanding their implications. If there are discrepancies, like a transfer that occurred after the shareholder’s death, point it out formally.
• If the DP or RTA is unresponsive or uncooperative, you can escalate the matter by filing a complaint on the SEBI SCORES (SEBI Complaints Redress System) portal.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The transmission of shares is governed primarily by civil and corporate laws, not criminal codes. The key legal provisions include:

• The Companies Act, 2013: Section 56 of the Act deals with the transfer and transmission of securities. It lays down the procedure for a company to register a transmission of shares by operation of law.
• SEBI Regulations: The Securities and Exchange Board of India (SEBI) has laid out detailed guidelines for Depository Participants and RTAs to follow for the transmission of shares held in DEMAT form. These regulations aim to simplify the process for nominees and legal heirs.
• The Indian Succession Act, 1925: This Act becomes relevant when there is no nomination. It governs the process of obtaining a Succession Certificate, Letter of Administration, or Probate of a Will, which are legal documents required to establish the authority of the legal heirs.

If you are the complainant

If you are the nominee or legal heir facing difficulties in getting shares transmitted to your name, you are the complainant in this matter. Here are the steps to follow:

• Formally submit the transmission request to the concerned Depository Participant (DP) with all required documents, such as the transmission request form, notarized death certificate, and nominee’s KYC documents.
• If the DP raises an issue, such as a questionable transfer that happened after the shareholder’s death, demand a clear written explanation and copies of the documents based on which that transfer was executed.
• If the response is unsatisfactory, file a formal complaint with the RTA of the respective companies whose shares are involved.
• Utilize the SEBI SCORES platform to lodge a formal complaint against the DP or RTA for non-cooperation or procedural lapses.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. A lawyer can issue a legal notice, represent you before regulatory bodies, or file a case in the appropriate court if necessary.

If you are the victim

As a rightful nominee or legal heir, any unreasonable delay or procedural hurdle that prevents you from accessing your inheritance makes you a victim of systemic inefficiency or potential wrongdoing. Your primary goal is to assert your legal rights.

• Preserve all evidence meticulously. This includes original documents, correspondence, and any proof of your relationship with the deceased.
• Do not be intimidated by complex jargon or procedural excuses from financial institutions. Your right to the shares as a nominee or legal heir is established by law.
• A posthumous transfer is a serious irregularity. It could be a clerical error or indicative of fraud. You must challenge its legality and demand a full investigation by the institution.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think. An experienced advocate can quickly identify the legal recourse available to protect your interests.

How the police behave in such cases

Typically, the police do not have a role in the standard process of share transmission, as it is a civil matter governed by corporate and succession laws. Police intervention is only warranted if there is an element of a criminal offense.

You would approach the police only if you have concrete reasons to believe that a crime, such as forgery (using fake signatures on a delivery instruction slip), cheating, or criminal breach of trust, has been committed. In such a scenario, you can file a First Information Report (FIR). The police would then investigate the criminal aspect under the relevant sections of the Bharatiya Nyaya Sanhita (BNS). However, for purely procedural delays or disputes, the correct forums are the company, RTA, SEBI, and civil courts.

FAQs people normally have

• What is the difference between transfer and transmission of shares?
  A transfer of shares is a voluntary act where a living shareholder sells or gifts their shares to another person. Transmission is an involuntary process where shares are passed on to the nominee or legal heir due to the operation of law, such as upon the death of the shareholder.
• What happens if the deceased shareholder did not appoint a nominee?
  If there is no nominee, the legal heirs must produce a legal document like a Succession Certificate, Probate of Will, or Letter of Administration, as required by the company or DP, to prove their claim over the shares.
• Who is a Registrar and Transfer Agent (RTA)?
  An RTA is an agency appointed by a company to maintain records of its shareholders, process share transfers, and handle other shareholder-related matters. They play a crucial role in the transmission process.

What evidence is required?

To process the transmission of shares, you will generally need the following documents:

• Original or notarized copy of the death certificate of the shareholder.
• Transmission Request Form, duly filled and signed by the claimant.
• PAN card and KYC documents (address proof, identity proof) of the claimant(s).
• Bank account details of the claimant, supported by a cancelled cheque or bank statement.
• DEMAT account details of the claimant.
• If there is no nomination, a Succession Certificate, Probate, or Letter of Administration may be required, especially if the value of the securities is above a certain threshold.

How long will the investigation take?

This is not a police “investigation” but a procedural verification. If all documents are in order, a DP or RTA typically completes the transmission process within 7 to 21 days. However, in complex cases, such as the one involving a posthumous transfer, the process can be significantly delayed. The institution will need to conduct an internal inquiry to understand the discrepancy. If the matter is escalated to SEBI or a court, the resolution can take several months or even longer, depending on the specifics of the case and the cooperation of all parties involved.

Advocate Sudhir Rao, Supreme Court of India