Photo: iStock
Photo: iStock

How ownership of securities held in demat form is transmitted after account holder dies

If no nomination has been made, then on the death of the sole holder or all the joint holders of a demat account, the legal heirs have to make a request for transmission of the beneficial ownership to their name

Transmission is the process of transferring the assets held by an individual to their legal heirs in the event of their death. The treatment of different securities such as shares, bonds and debentures, units of mutual funds and others in a demat account will depend upon how the account was held. If the account was held jointly, i.e., if the deceased account holder was one of the holders and there were other joint holder(s) in the account, then the securities are transmitted to the name of the joint holder(s) in the same order.

For example, if a demat account is held in the name of A, B and C, and A expires; the transmission will be done to B and C with B as the first holder and C as the second holder. To execute this, the surviving joint holder(s) should submit a transmission request form duly filled up and supported by a notarised or attested copy of the death certificate and client master report of the demat account held in the name of surviving holders issued by the depository that identifies the demat account holders and provides information such as the form of holding, bank account, nominations, and so on.

If the sole holder or all the joint holders of a demat account die and if a nomination has been made in the account, then the securities will be transmitted to the nominee. The nominee has to make a request using the transmission form supported by a duly notarised copy of the death certificate to transmit the beneficial ownership of the securities held in the demat account to the account of the nominee.

If no nomination has been made, then on the death of the sole holder or all the joint holders of a demat account, the legal heirs have to make a request for transmission of the beneficial ownership to their name. If the value of the securities held in the account does not exceed 5 lakh on the day of making the application for transmission, then depository participant may process the request on the submission of the transmission request form supported by attested or notarized copy of the death certificate. An affidavit and letter of indemnity in the prescribed format, a no objection certificate (NOC) from the other legal heirs or family settlement deed in the prescribed format, and client master report of the demat account of the claimant will also be required.

If the value of the securities is more than the prescribed limit, then the claimant has to provide a copy of the probate of the Will or attested or notarised copy of letter of administration or a duly attested or notarised copy of the succession certificate or an order of a competent court to support their legal claim along with the transmission request, copy of death certificate and client master report of the demat account of the claimant.

The Sebi (Listing Obligations and Disclosure Requirements) Regulations require a listed company to ensure that transmission requests for securities held in dematerialized mode are processed within seven days of receiving all the required documents.

Once the transmission of securities is done, the demat account of the deceased person is closed.

Close