Introduction
The SEBI circular on transmission of shares has significantly simplified the process for investors and legal heirs dealing with securities after the death of a shareholder. Earlier, families faced lengthy documentation, delays, and inconsistent practices across companies and registrars. To address these challenges, the Securities and Exchange Board of India (SEBI) issued comprehensive guidelines to standardize and streamline the transfer and transmission of shares while strengthening investor protection.
This blog explains the latest SEBI circular, the difference between transfer and transmission of shares, applicable procedures, documentation requirements, and key benefits for investors and legal heirs.
What Is Transmission of Shares?
Transmission of shares refers to the transfer of ownership of shares due to operation of law rather than a voluntary act. It typically occurs in cases such as:
- Death of a shareholder
- Insolvency
- Succession by legal heirs
- Court orders or inheritance
Unlike a sale or gift, transmission does not involve consideration and is governed by succession laws.
Difference Between Transfer and Transmission of Shares
| Basis | Transfer of Shares | Transmission of Shares |
| Nature | Voluntary | Involuntary / by law |
| Consideration | Yes | No |
| Applicable Law | Companies Act & SEBI regulations | Succession laws & SEBI circular |
| Instrument | Share transfer deed | Death certificate / legal documents |
| Stamp Duty | Applicable | Not applicable |
Understanding this distinction is essential when complying with the SEBI circular on transmission of shares.
Overview of SEBI Circular on Transmission of Shares
SEBI issued multiple circulars (notably in 2021 and subsequent updates) to simplify transmission and align it with digital and investor-friendly practices. The circular mandates uniform documentation, timelines, and enhanced transparency for listed companies, RTAs, and depositories.
Key Objectives of the SEBI Circular
- Simplify the transmission process for legal heirs
- Reduce paperwork and procedural delays
- Ensure faster settlement of claims
- Protect investor and nominee rights
- Encourage dematerialisation of shares
Key Highlights of the SEBI Circular
1. Simplified Transmission for Small Value Holdings
For shares valued up to a prescribed threshold (as notified by SEBI), transmission can be completed with minimal documentation, such as:
- Death certificate
- Affidavit
- Indemnity bond
This has greatly reduced the burden on families with modest investments.
2. Mandatory Dematerialisation
SEBI encourages transmission in demat form. Physical shares must be dematerialised before or during transmission, ensuring better security and ease of future transactions.
3. Uniform Documentation
The SEBI circular on transmission of shares standardizes documents required across companies and registrars, eliminating ambiguity and inconsistent practices.
4. Defined Timelines
RTAs and companies must process transmission requests within stipulated timelines, improving efficiency and accountability.
5. Nomination-Based Transmission
If a nomination is registered, shares are transmitted directly to the nominee without requiring a succession certificate or probate, subject to compliance.
Documents Required for Transmission of Shares
Depending on whether a nomination exists, documents may include:
- Death certificate (self-attested copy)
- KYC documents of claimant
- Affidavit and indemnity bond
- Succession certificate / probate of will (if required)
- Transmission request form
The SEBI circular on transmission of shares ensures these requirements remain consistent nationwide.
Transmission of Shares With Nominee
When a valid nominee is registered:
- Transmission is faster
- No court order is required
- Shares are transferred directly to the nominee’s demat account
SEBI strongly recommends investors register nominees to avoid legal hurdles.
Transmission of Shares Without Nominee
In the absence of nomination:
- Legal heirs must establish entitlement
- Succession certificate, probate of will, or letter of administration may be required
- Multiple claimants must provide NOCs
This process is also governed by the SEBI circular to ensure fairness and clarity.
Transfer of Shares Under SEBI Regulations
While transmission occurs by law, transfer of shares involves voluntary transactions such as sale or gift. SEBI regulations ensure:
- Proper execution of transfer deeds
- Compliance with demat norms
- Timely updating of ownership records
Understanding transfer and transmission of shares helps investors comply with legal and regulatory requirements.
Benefits of the SEBI Circular for Investors
- Faster settlement of inheritance claims
- Reduced legal expenses
- Transparent and standardized process
- Improved investor confidence
- Protection of legal heirs’ rights
Common Challenges and How SEBI Addresses Them
The SEBI circular addresses issues like:
- Delays by registrars
- Excessive documentation
- Confusion between transfer and transmission of shares
- Lack of nominee awareness
By enforcing timelines and standardization, SEBI has significantly improved compliance.
Importance of Dematerialisation in Transmission
Dematerialisation ensures:
- Safe custody of securities
- Easier transmission and transfer
- Reduced risk of loss or fraud
SEBI’s push toward demat holdings aligns with modern, digital-first investment practices.
Conclusion
The SEBI circular on transmission of shares is a major reform that simplifies inheritance-related share transfers while safeguarding investor interests. By clearly defining procedures for transfer and transmission of shares, SEBI has made the system more transparent, efficient, and investor-friendly. Investors are advised to register nominations, dematerialise holdings, and maintain updated KYC to ensure seamless transmission.
Frequently Asked Questions (FAQ)
1. What is the SEBI circular on transmission of shares?
It is a regulatory guideline issued by SEBI to standardize and simplify the process of transmitting shares to legal heirs or nominees.
2. What is the main difference between transfer and transmission of shares?
Transfer is voluntary and involves consideration, while transmission occurs by law due to death or succession.
3. Is a succession certificate mandatory for transmission of shares?
Not always. If a nominee exists or the value is within SEBI-prescribed limits, transmission can occur without a succession certificate.
4. Can physical shares be transmitted under the SEBI circular?
Yes, but they must be dematerialised before or during transmission as per SEBI guidelines.
5. How long does transmission of shares take?
SEBI mandates defined timelines, and most cases are processed within a few weeks once documents are complete.
6. Why is nomination important under SEBI rules?
Nomination ensures faster and hassle-free transmission of shares without court intervention
