This article outlines the steps involved in transferring physical shares following the issuance of a succession certificate in India. Gain insights into the documentation requirements, procedural intricacies, and compliance obligations essential for facilitating smooth share transfers in estate administration.
The transfer of physical shares following the death of a shareholder can be a complex process requiring careful adherence to legal protocols. A succession certificate plays a crucial role in this procedure, serving as a legal document that validates the heirs’ right to inherit the deceased’s assets, including physical shares. This article delves into the intricacies of share transfers, the necessity of succession certificates, and the step-by-step process involved in ensuring a lawful and smooth transition of ownership.
What Exactly Are Shares?
Shares are equity ownership units in a company, representing a portion of the company’s capital. Holding shares in a company makes one a shareholder, giving them rights to a part of the company’s profits and assets. Shares can exist as financial assets and provide an equitable distribution of residual earnings in the form of dividends if declared. For stocks that do not pay dividends, shareholders profit from the rise in stock prices as the company’s profits increase. Thus, shares are both a source of income through dividends and a vehicle for capital appreciation.
Transfer of Shares Meaning
The transfer of shares refers to the process by which the title of shares is transferred from one person to another. This transfer becomes legitimate only when the company whose shares are being transferred is informed and updates its register to reflect the change in ownership. It is a critical step to ensure the legal standing of the transfer and the rightful recognition of the new owner.
Accounts Held Jointly
When securities are held in a joint account, the transfer of ownership upon the death of one account holder is relatively straightforward. The surviving joint owner can receive the shares by filing a transmission form and providing a death certificate. The joint owner must also open a separate account with a depository participant to hold the transferred shares. Ensuring consistent name spelling across both accounts is crucial to avoid discrepancies.
Account With Nomination
For accounts with a nominee, the transfer of shares involves the nominee filing a form and submitting a certified death certificate of the deceased holder. However, if there are legal claims on the shares, the process can become complex and may require legal resolution. The nominee must establish their right to the shares, which might involve additional documentation or court intervention.
Without A Nomination Account
When an account lacks a nominee, the transfer process becomes more complicated. The bank or financial institution must first verify the rightful ownership of the shares, which involves examining all prior ownership documents provided by the deceased account holder. This process can be lengthy and may require additional documentation. In cases where multiple successors are specified in the will, legal intervention may be necessary to determine the distribution of shares.
Procedure For How to Transfer Physical Shares After Obtaining a Succession Certificate
To transfer physical shares after obtaining a succession certificate, follow these steps:
- Get a Succession Certificate: This legal document confirms the lawful heirs’ entitlement to the deceased’s property. The process involves submitting a petition to the appropriate court, presenting documentary proof of the deceased’s demise, and providing evidence of the heirs’ familial ties to the deceased.
- Locate the Share Certificates: Physical share certificates must be found before starting the transfer process. These could be held by the deceased, a bank, or a broker.
- Complete the Transfer Deed: This document transfers ownership of shares from the deceased to the legal heirs. It must include the share certificates, names, and signatures of the heirs.
- Notarize the Transfer Deed: The deed must be notarized by a public notary or an authorized officer of the firm whose shares are being transferred.
- Submit the Transfer Deed and Succession Certificate: Both documents must be submitted to the firm, which will update its records to reflect the transfer.
- Pay Transfer Fees: The firm may charge a fee for the transfer, which must be paid by the heirs.
- Update the Share Register: The firm updates its share register to reflect the new ownership.
After Receiving a Succession Certificate, You Must Take the Following Actions to Transfer Physical Shares
- Contact the Registrar: Initiate contact with the registrar of the corporation holding the shares to get necessary information and documents for the transfer.
- Fill Out the Transfer Form: Provide details of the deceased shareholder, the successor, the number of shares to be transferred, and the successor’s signature.
- Provide Required Documents: Submit a copy of the succession certificate, the death certificate, and any other required documents to the registrar.
- Submit the Transfer Form and Documentation: The registrar will verify the paperwork and complete the transfer.
- Receive Transfer Confirmation: The registrar will confirm the transfer, providing details of the transferred shares and the new shareholder’s name.
- Update Records: Update your records, including bank records and personal files, to reflect the transfer.
- Pay Any Fees: Some registrars may charge a fee for processing the transfer, which must be paid to finalize the transfer.
- Consider Dematerialization: Converting physical shares to electronic form can facilitate transfers and reduce the risk of losing or damaging share certificates.
Conclusion
Transferring physical shares after obtaining a succession certificate is a detailed process that requires compliance with legal requirements to ensure legitimacy. Seeking legal advice and following the correct procedures can help in executing a smooth transfer. With proper guidance and documentation from Vakilsearch experts, legal heirs can rightfully inherit the deceased’s assets without unnecessary complications.
FAQs:
What is a succession certificate and how does it relate to physical share transfer?
A succession certificate is a legal document issued by a court that certifies the rightful heirs to a deceased person's property. It is crucial for the transfer of physical shares as it legally authorizes the heirs to inherit the shares.
How does one obtain a succession certificate?
To obtain a succession certificate, one must submit a petition to the appropriate court, provide documentary proof of the deceased's death, and evidence of the heirs' relationship to the deceased. The court issues the certificate after verifying the submitted documents.
Can a succession certificate be used for all types of assets?
Yes, a succession certificate can be used for various assets, including physical shares, bank accounts, and other movable properties. It serves as proof of the heir's entitlement to the deceased's assets.
What is the process for transferring physical shares after obtaining a succession certificate?
The process involves locating the share certificates, completing and notarizing a transfer deed, submitting the deed and succession certificate to the firm, paying any applicable transfer fees, and updating the firm's share register to reflect the new ownership.
Are there any fees involved in transferring physical shares with a succession certificate?
Yes, there may be fees involved, such as transfer fees charged by the firm handling the shares and any fees associated with obtaining the succession certificate. These fees are typically borne by the lawful heirs.
