A demat account is a form of account where electronic copies of shares and securities are kept. It is made up of dematerialized securities. Transmission is the process of transmitting an individual's assets to their legal heirs in the event of their death.
Like any other asset type, the issue of transferring securities held in a demat account upon the death of the account holder must be handled. Depending on how the account was kept, different assets in a demat account, such as shares, bonds and debentures, mutual fund units, and others, would be handled differently. Let's take a closer look at them.
Transfer of Securities
Individual Owner with a Nominee
The transmission method is straightforward if a single demat account holder dies and leaves a nominee. A properly completed transfer form and a notarized copy of the death certificate duly certified by a Gazetted Officer or a Notary Public are needed of the nominee. The form is available in person at the DP office or online at the DP website. The DP checks the supplied paperwork and, if everything is good, sends the securities to the nominee's DP account.
- Transmission Request Form - This is a form that provides information on the customer, the nominee, and the assets that need to be moved from the demat account. The form may be retrieved on your depository participant's website (DP).
- Death Certificate - A copy of the now-deceased account holder's death certificate that has been notarized or certified by a Gazetted Officer.
Individual Owner without a Nominee
If a single-holder demat account holder dies without a nominee, securities will be transferred to the deceased's lawful heirs, as established by a competent court ruling. If the value of the securities is less than ₹1 lakh, the transmission request can be processed with the submission of a transmission form, an attested death certificate copy, a letter of indemnity, an affidavit in the prescribed format, and a letter of consent from all legal heirs who do not object to transmission.
- Letter of Indemnity - It is a legal statement that the person named in the letter is the lawful heir of a deceased person.
- Affidavit – A non-judicial stamp paper affidavit declaring that the applicant is the lawful heir of the dead and hence the rightful claimant to the assets in the demat account can also be utilised.
- No Objection Certificate - If there are many legal heirs, and one of them is the applicant, this is required. The other legal heirs have no objections to the securities in the deceased's demat account being transferred to the applicant, according to this NOC.An authenticated copy of a family settlement deed can be used instead of a NOC.
Jointly Owned Account
For jointly held accounts, securities are transferred to surviving holders upon receipt of a properly completed transmission form and a properly certified copy of the deceased holder's death certificate. The surviving holders must have or create a separate DP account with names in the same order as the names appear in the joint account to be closed in order to receive securities.
- Transmission Request Form - This is a form that provides information on the customer, the nominee, and the assets that need to be moved from the demat account.Most DPs have a distinct annexure for joint accounts that differs from the annexure needed in the event of a nominee. You must complete the appropriate annexure as directed by your DP.
- Death Certificate - A copy of the now-deceased account holder's death certificate that has been notarized or certified by a Gazetted Officer.
Listed companies must guarantee that transmission requests for securities stored in dematerialized mode are completed within seven days after receiving all relevant documentation, according to the Sebi (Listing Obligations and Disclosure Requirements) Regulations. The demat account of the dead individual is closed after the securities have been sent.
It is crucial to understand how to transfer shares from one demat account to another in the event of the account holder's death. The process is significantly simpler in the event of joint accounts or when the account holder has designated a nominee, as shown in the preceding sections.
Appointing a nominee establishes a clear line of succession for the assets held in the demat account in the event of the account holder's death. As a result, appointing a nominee when creating a demat account is a smart idea to avoid future complications.