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A Demat account is extremely useful when it comes to trading in the stock market and is a compulsion to have for trading in the equity segment by the Securities and Exchange Board of India (SEBI). A Demat account is also utilised to store other securities in electronic format and provides a safe way of storing securities. Although it can be a safe haven for all your securities, one could be wary of what would happen to those securities during the untimely death of the owner or how to transfer shares of the Demat account holder after death.
One can wonder if this is a drawback of having a Demat account, but for this very purpose, there is the provision of transmission of shares on the death of a shareholder. The whole process of transfer of shares on the death of a Demat account holder is called transmission of securities. The entire transfer process takes about 15 working days. The process of transmission of securities is dependent on the type of account and whether nominees are added to the account or not. The conditions are:
Table of Contents
When Nomination Exists
During the account opening process, the Demat account holder is asked to add nominees to their Demat account. This benefits everyone as it leads to a reduction in the paperwork required if anything were to ever happen to the owner of the Demat account. The transfer of shares doesn’t occur automatically; instead, one has to submit certain documents. These documents must be submitted to the depository participant’s (DP) office, which will initiate the transmission process.
Transmission Request Form
This form is available on the DP’s website and can be downloaded. It contains the required information, such as details about the Demat account holder, details about the nominee, and the assets in the account that need to be transferred.
● Death Certificate
A copy of the death certificate of the deceased account holder, which is either notarised by a notary or attested by a Gazetted Officer, is needed.
● Client Master Report (CMR)
A CRM consists of various details of the Demat account holder and the account itself, like the client’s bank details, which are linked to the account, securities held in the account, etc. A CRM can be obtained by downloading it from the trading platform and must be submitted to the DP.
In the Case of No Nomination
The process is lengthy and tedious as the amount of documents that must be submitted is higher. The increase in documentation is to ensure that the shares are transferred to the right heir. One must have a nominee to ensure this doesn’t happen. The documents required for the transmission of shares on the death of a shareholder are:
Transmission Request Form
A Transmission Request Form, just like the above case, must be filled out and submitted.
Death Certificate
One also needs to submit a copy of the death certificate of the departed account holder, which is notarised by a notary or attested by a Gazetted Officer.
Letter of Indemnity
This letter is a legal declaration stating that the mentioned individual is the legal heir of the deceased. The letter must be executed on non-judicial paper and notarised by a notary.
Affidavit
A notarised affidavit on a non-judicial stamp paper, which states that the applicant is the legal heir of the departed, is also required. This helps to prove that the applicant is the rightful claimant of the assets contained in the Demat account of the deceased.
NOC (No-Objection Certificate)
A NOC is crucial when there are multiple legal heirs while there is only one applicant for the transfer of shares on the death of a Demat account holder. This document ensures that the other legal heirs have no issues and that the process can be initiated without any opposition.
Family Settlement Deed
A family settlement deed consists of information about the inheritance of each surviving heir. This provides information about the partitioning of the shares in the Demat account among the surviving legal heirs. It also includes information about the Demat account of the heir.
When Account Is Jointly Held
A joint Demat account acts as a special case with the surviving joint owner inheriting all the shares in case the one joint account holder passes away. The documents required are:
- Transmission Request Form
- Death Certificate
- Client Master Report (CMR)
The documents required are almost the same as those when a nominee is mentioned by the account holder. The notable difference is the Transmission Request Form, which is different for joint Demat accounts. Make sure that you check the form that is being filled, as DPs have a different annexure for such cases.
Conclusion
The above-mentioned procedures can be undertaken in case the holder of a Demat account passes away. Adding a nominee is the best way of securing your account in times of unforeseen events. The securities of a Demat account can be very helpful in such adverse times, and knowing how to get them transferred is a must.