• Transmission of shares on death to legal heir

My wife 's father expired about two months back without leaving a will . He was promoter of Pvt ltd company limited by shares registered with registrar of companies , Jaipur with 48 percent shares in his name .
My wife is legal heir along with her two brothers and surviving mother .Article of association of that company states Transmission of shares --Regulations 25 to 28 of Table A shall apply .
I fear her brothers may get these shares transmitted in their name as record of company register is maintained by them / their company secretary .
Is succession certificate necessary for them to get these shares transmitted in their names . 
Death certificate and letter authorising whole time director , my wife's brother for transmission of shares has been filed by company with registrar .
Advise me whether she can approach registrar with deAth certificate / her Id proof or please advise me best course of action involving minimum legal hassles . 
I understand as per Hindu succession act amendment 2005 my wife has full right on her part as one of legal heir in absence of will .
Asked 7 years ago in Business Law

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8 Answers

Hi

Hindu succession Act will be applicable in your case.

The entire stake of your father in law (48%) will be divided equally between the two brothers, surviving mother and your wife.

In the event of you anticipating any foul play, your wife should immediately undertake to do the following

a) Write a letter by Registered post with Acknowledgment due to the Managing Director and also the Company secretary staking her claim in the shares of her father and also submit the death certificate and family member certificate to the company and

b) Also Immediately meet the Registrar of companies in person and submit a written request not to transfer the shares/ make amendments in Registrar of Companies documents without her written consent. Along with the written consent she should submit the death certificate and family member certificate of her father's family.

c) Your wife will also need to apply for succession certificate in the District court where the registered office of the private limited company is located.

Hope this helps.

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

1. SEBI has set threshold value for transmission of shares, without requirement of producing Probate/Letter of Administration/SucceSEBI has set threshold value for transmission of shares, without requirement of producing Probate/Letter of Administration / Succession Certificate. For securities held in single name without a nominee, following additional documents may be sought:

a) Affidavit made on appropriate non judicial stamp paper – to the effect of identification and claim of legal ownership to the securities

b) For value of securities upto ` 2,00,000 (Rupees Two lakh only) per issuer company as on date of application, one or more of the following documents:

c). No objection certificate [NOC] from all legal heir(s) who do not object to such transmission (or) copy of Family Settlement Deed duly notarized or attested by a Gazetted Officer and executed by all the legal heirs of the deceased holder.

d) Indemnity made on appropriate non judicial stamp paper – indemnifying the STA/Issuer Company.

2.For value of securities more than ` 2,00,000 (Rupees Two lakh only) per issuer company as on date of application, one of these documents is required-Succession certificate (or) Probate of will (or) Letter of Administration (or) Court decree.

If nomination has not been made by the deceased the shares cannot be realised without a succession certificate from the civil court. To preempt any foul play by her brothers your wife may file a caveat and also file a suit for injunction to restrain her brothers from transferring the shares to themselves to your wife's exclusion.

3. Hindu Succession 2005 Amendment applies to only ancestral property, where the shares of her father are not ancestral in her hands. Her share is at par with the share of her brothers if her father died intestate.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

1) your wife shoukd apply for succession certificate for shares in her name and that of her brothers

2) even if your brother in law applies fir transmission of shares company woukd insist on succession certificate

3) your wife can address letter to company secretary that shares should be transferred on all 3 names as father died intestate

4) copy of letter should be sent to ROC for information

Ajay Sethi
Advocate, Mumbai
94522 Answers
7485 Consultations

5.0 on 5.0

Hi

1) A nominee is only a trustee appointed by the executant.(your father in law).

2) A nominee is NEVER THE OWNER.

3) It is the Legal Heirs who are the actual owners.

4) It is the pristine duty of the trustee to receive the monies/transfer share in accordance to the names mentioned in the Legal heir/family member certificate without withholding the same for his personal use.

5) The Nominee holds the shares for and on behalf of the legal heirs and transfer shares to each of the legal heirs in accordance to the partition deed/ family settlement/ Succession certificate as and when produced by the Legal heirs.

6) Nominee NOT to transfer shares arbitrarily to the legal heirs. Nominee should abide by the terms stipulated in the Partition Deed/ Family Settlement/Succession Certificate till such time the documents are presented to him.

7) A company secretary is the Nominee/Trustee, in the event of a share holder not specifying a nominee. He should transfer the shares of the company in accordance to the Partition deed/Family Settlement/Succession certificate.

8)With reference to writing to company, i have recommended writing to the company as my first point as the company needs to be informed by individual family member of the deceased share holder failing which the company is free to transfer shares on first information basis. (The case of YES BANK is precisely similar to yours wherein family members of the deceased founder failed to write to company secretary as the other founder was the brother in law of the deceased founder. The family of deceased founder assumed that the brother in law would take care of interests of the deceased founder's family member which did not happen and hence the family members of deceased founder lost the management control of the leading Private Bank)

Hope this helps

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

Since there is no nominee the succession certificate will have to be obtained by the legal heirs, without which the company will not allow realisation of shares.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

nominee is mere trustee for legal heirs

2) nominee is not absolute owner of the shares

3)you can write to company secretary informing them of father demise and that as legal heir you have one fourth share

4) the objective being to restrain company secretary from transferring shares only in name of one of legal heirs

Ajay Sethi
Advocate, Mumbai
94522 Answers
7485 Consultations

5.0 on 5.0

Is succession certificate necessary for them to get these shares transmitted in their names .

For settling the matter legally a succession certificate through a court of law is mandatory but since those people are notoriously known for manipulation of records and fabricating documents, they may even forge her signature to straighten the records in their favor depriving the rights of your wife. You may ask your wife to keep a constant vigil on the developments and to promptly initiate proper legal actions immediately as and when a circumstance warrants to do so.

Advise me whether she can approach registrar with deAth certificate / her Id proof or please advise me best course of action involving minimum legal hassles .

Your wife can first try to settle the scores amicably with her siblings and if that do not work in her favor then she may try to initiate appropriate legal action suiting to the prevailing situation.

I understand as per Hindu succession act amendment 2005 my wife has full right on her part as one of legal heir in absence of will .

Your wife being the daughter of her deceased father who died intestate, she as a legal heir to the deceased is entitled to an equal share in the properties left behind by the deceased as his successors in interest.

T Kalaiselvan
Advocate, Vellore
84711 Answers
2172 Consultations

5.0 on 5.0

As per AOA, no nominee is mentioned and face value of shares is above 3 lacs.

What will be legal position of nominee if suppose nominee is there ... Mere trustee till it is passed to rightful owner or nominee is rightful owner as per latest provisions of companies act /Hindu succession act

You are right in your understanding.

The nominee is just a trustee and the and the share of movable properties belonging to the legal heirs of the deceased is to be disbursed to the heirs by the nominee after receiving it from the company.

Would it be better to write company

secretary reg . Transmission of shares held by my wife's deceased father jointly in name of all 4 legal heirs or one fourth of shares to be transmitted in my wife's name . And why ?

You cannot ask for a split in the share, instead can ask the company to keep it on hold until a partition is taking place among the legal heirs about this.

You can first issue legal notice to her siblings demanding her share in the shares left behind by her father and for an amicable settlement, failing to respond by he siblings she may initiate proper legal suit for recovery of her dues.

T Kalaiselvan
Advocate, Vellore
84711 Answers
2172 Consultations

5.0 on 5.0

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