• DMAT transmission

What is the current status of DMAT transmission.....Does companies act 109 A still applies...that is the DMAT shares gets vested in Nominee and not in beneficiary in the will.
If the nomination facility is availed by a DMAT holder, after his death...will the owner of DMAT shares be his nominee in DMAT account OR the beneficiary in the will ?
Please answer only if you know the law accurately.
Asked 7 years ago in Property Law
Religion: Hindu

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8 Answers

1. The law applies in same manner in respect of dematerialised shares and paper shares.

2. The nominee is like a trustee and he just receives the value of the shares on behalf of the legal heris of the share holder and thereafter it is legal duty of the nominee to handover the same to the inheritor of the share holder.

3.So nominee may recive the value of the sahre but once Will come into effect he is bound to handover the same to the beneficiary of the Will.

4. In your case the son can deprive the right of his sister as per terms of the Will.

5.If the son refuses to handover the value of the assets in which he stood as nominee the daughter can bring necessary civil and criminal prosecution to recover the amount.

6.However in most states taking Probate of Will is incumbent to give legal force of the the Will.

7. To put it in one word the daughter will inherti the shares.

Devajyoti Barman
Advocate, Kolkata
22920 Answers
498 Consultations

5.0 on 5.0

1) Under Section 109A of the Companies Act, if the nomination is made under procedure prescribed by law, the nominee will be entitled to become the rightful owner of shares. And, such right shall exclusively favour the nominee and exclude all other persons.

2) Bombay High Court in Harsha Nitin Kokate vs The Saraswat Co-Op. Bank Ltd. & Ors 2010(112)BomLR2014 (“Kokate case”) was that the nominee would be entitled to all the rights in shares and debentures, including ownership rights, to the exclusion of all other persons. Tholders, in relation to such shares in, or debentures of, the company to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.”

3) suseqently bombay high court in case of Jayanand Jayant Salgaonkar vs Jayashree Jayant Salgaonkar and Ors held that the that the rights of the heirs override those of a nominee. it was held that the amount, in any head, can be received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with law of succession governing them.

4) in your case nominee would not be the owner of dmat shares but only a trsutee for legal heirs

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

dmat shares will be inherited by daughter only .

2) son is mere nominee ie atrustee for legal heirs and not entitled to ownership of the sahres

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

1) apply for probate of father will

2) as beneficiary in father will you should be entitled to shares lying in said account

3) mother was entitled only to dividends and could not bequeath shares lying in said account to your sister

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

A nominee is simply a custodian for most assets, except in case of equities.

Recently supreme court ruled that a nominee may not necessarily be the beneficiary of a deceased person’s proceeds.

The well-known theory is that a nominee is merely a trustee, not the owner. He/she may temporarily possess the money, but will have to hand it over to the heir when the situation arises.”

But, it is different in case of stocks. Recently, the Bombay High Court ruled that a nominee shall be eligible to acquire the shares of a deceased shareholder instead of legal heirs.

Under Section 109A of the Companies Act, if the nomination is made under procedure prescribed by law, the nominee will be entitled to become the rightful owner of shares. And, such right shall exclusively favour the nominee and exclude all other persons.

Besides these special situations, a will takes precedence over other nominations. The legal heir mentioned in the will is the only person entitled to the deceased’s assets, except in case of equities, where the nominee gets the money.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

You have not stated that your mother is living or not now.

As far as the equities are concerned it is the nominee who takes preference over the beneficiary through a will.

If this DMAT account of your father was properly transferred to your mother's name and she becomes the owner of the account, then the nominee, if not cancelled during her lifetime shall be valid and the nominee is entitled to get the account transferred to his name or get the benefits of the shares.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

1) mother was entitled to only dividends as it forms part of father estate

2) judgment of bombay high court is clear that on demise of owner shares would devolve on legal heirs

3) he purpose of the Companies Act is to consolidate the law relating to companies and certain other associations. It is not in any sense intended or directed to settled laws of succession or transfer of property, but only the law relating to companies.

4) in Shipra Sengupta v Mridul Sengupta & Ors. 19 Here again a claim was made on the basis of a nomination, the nominee contending that he succeeded, by virtue of that nomination made inter vivos, to specific movable property to the exclusion of heirs. Sarbati Devi20 was considered as was Khanchandani.21 Then the Supreme Court held:

17. The controversy involved in the instant case is no longer res integra. The nominee is entitled to receive the same, but the amount so received is to be distributed according to the law of succession. In terms of the factual foundation laid in this case, the deceased died on 8.11.1990 leaving behind his mother and widow as his only heirs and legal representatives entitled to succeed. Therefore, on the day when the right of succession opened, the appellant, his widow became entitled to one half of the amount of the general provident fund, the other half going to the mother and on her death, the other surviving son getting the same.

19. In view of the clear legal position, it is made abundantly clear that the amount in any head can be received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with law of succession governing them. In other words, nomination does not confer any beneficial interest on the nominee. In the instant case amounts so received are to be distributed according to the Hindu Succession Act, 1956.

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

A Demat account cannot continue to remain in force on a dead person's name.

If it appears in the company's balance sheet as an estate of your father, you may bring it to an end by nullifying the entry by passing suitable journal entries to give effect to that.

As per the new companies act section 109A, if the nomination is made under procedure prescribed by law, the nominee will be entitled to become the rightful owner of shares.

Now you have become a rightful owner as per the provisions of law and I dont think you have any problem ij this, now why to weant to kindle the old issue in the name of contradiction.

You dont need to have any judgment when the provision of law is clear with any ambiguity.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

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