Transmission of shares refers to the process by which the ownership of shares passes from one person to another due to events such as the death, insolvency, or mental incapacity of a shareholder. Unlike transfer of shares, which is a voluntary act initiated by the shareholder (such as selling or gifting shares), transmission is typically a legal process that occurs automatically as a result of a shareholder’s change in status, and it does not require the physical transfer of share certificates.

Key Points about Transmission of Shares

1. Events Triggering Transmission -

                Death of a shareholder: The shares of a deceased person are transferred to their legal heirs or beneficiaries.
                Incapacity or Mental Disorder: If a shareholder is declared legally incapacitated, the shares may be transmitted to a legal representative or guardian.
                Insolvency: If the shareholder is declared insolvent, the shares are transmitted to the insolvency estate or trustee.
                Bankruptcy: Similar to insolvency, if a shareholder goes bankrupt, their shares pass to the bankruptcy estate.

2. Difference Between Transfer and Transmission - 

                Transfer of Shares: A voluntary act where a shareholder sells or gifts their shares to another person, which requires execution of a transfer deed and typically the submission of share certificates.
                Transmission of Shares: An involuntary act triggered by legal events (death, insolvency, etc.), where the shares are transferred to the legal heir, representative, or estate without the need for a transfer deed. The company’s registrar facilitates the process by updating the shareholder register.


Process of Transmission of Shares

The transmission of shares generally involves the following steps:

1. Intimation of the Event - The legal heirs or representatives of the shareholder (in case of death) or the concerned parties (in case of mental incapacity or insolvency) must inform the company about the event that triggers the transmission (death, mental incapacity, etc.).
                    • For death, a death certificate must be provided.
                    • In case of incapacity, a court order declaring the person as mentally incompetent or under a guardian’s care is required.
                    • In the case of insolvency, a court order of insolvency or a trustee's declaration is needed.

2. Submission of Required Documents - The following documents must be submitted to the company’s Registrar and Transfer Agent (RTA) or Investor Relations Department for the transmission to be processed:
                   • Death certificate (in case of death).
                   • Will or legal heir certificate: If the deceased shareholder left a will, a copy of the will must be submitted along with probate (if applicable). If there is no will, the legal heirs may need to submit an heirship certificate or succession certificate to establish their claim.
                   • Letter of Administration (if applicable).
                   • Identity proof of the claimant (legal heir, guardian, etc.).
                   • Filling out the transmission form: Companies typically have a transmission form that needs to be filled out by the legal representative or heir.

3. Verification of Documents - The company’s registrar or RTA will verify the submitted documents. This is a critical step to ensure the legitimacy of the transmission request. In the case of a deceased shareholder, the company will check the death certificate and ensure that the transmission is made in favor of the rightful heirs.

4. Issue of New Share Certificates - After the documents are verified, the company will update its shareholder register to reflect the transmission of shares to the new holder (the legal heir, representative, or trustee). The company will then issue new share certificates in the name of the new shareholder.

5. Transmission of Shares to the New Shareholder - Once the transmission is processed, the shares are legally transferred to the new holder, and they become the rightful owner of the shares, with all associated rights (e.g., voting rights, dividends).


Common Scenarios of Transmission

1. Transmission of Shares on Death - If a shareholder dies, the shares are transmitted to the legal heirs or beneficiaries according to the will (if available). If no will exists, the legal heirs must submit an heirship certificate or succession certificate to prove their entitlement to the shares.

2. Transmission in Case of Mental Incapacity - If a shareholder is declared mentally incapacitated by a court, the shares are transmitted to a guardian or legal representative appointed by the court. The guardian will manage the shares on behalf of the incapacitated shareholder until their capacity is restored.

3. Transmission in Insolvency - If a shareholder is declared insolvent, their shares are transmitted to the trustee of the insolvency estate, who will manage the shares in accordance with insolvency laws. The trustee will handle the transfer of shares to settle debts or liquidate assets.

4. Transmission of Jointly Held Shares - If shares are held in joint names, the death of one of the joint holders will result in the transmission of the shares to the surviving joint holder(s). A death certificate must be submitted, and the name of the deceased shareholder will be removed from the register.


Documents Required for Transmission

• Death Certificate (in case of death).
• Succession Certificate or Heirship Certificate (if there is no will).
• Will (if available), along with probate (if applicable).
• Court Order (in cases of insolvency or mental incapacity).
• Transmission Form provided by the company.
• Identity Proof of the claimant (for legal heirs or representatives).
• Address Proof (in some cases).


Key Considerations

• No Transfer Deed Required -  Unlike share transfer, a transfer deed is not required in transmission, since the process is a legal transfer based on circumstances beyond the control of the shareholder.
• Legal Heirs vs. Beneficiaries -  If the deceased shareholder left a will, the shares are transmitted according to the will’s instructions. In the absence of a will, the legal heirs (as determined by intestate succession laws) inherit the shares.
• Tax Implications - Transmission is not considered a sale or transfer for tax purposes, so there are typically no capital gains tax implications at the time of transmission. However, the taxability may apply if and when the heirs decide to sell the shares.

How Investment Samadhaan can assist with the Transmission of Shares...

Investment Samadhaan can be a valuable resource for investors facing issues related to the transmission of shares.

While it doesn’t directly handle the legal procedures of share transmission, it provides expert guidance, helps prepare necessary documentation, liaises with companies and RTAs, resolves disputes, and helps in filing complaints if the process is delayed or mishandled. By acting as an intermediary and offering support.

Investment Samadhaan ensures that the transmission of shares is completed efficiently and in compliance with relevant laws.