SEBI Guidelines on Transmission of Shares, Demat Accounts and Mutual Fund Units for Deceased Holders: What You Need to Know

Understanding Transmission in the Securities Market

Losing a loved one is difficult and sorting out their investments in shares, demat accounts or mutual funds can make it even harder. Many families run into delays, different rules from various intermediaries and requests for piles of legal papers when trying to transfer these holdings. The Securities and Exchange Board of India (SEBI) oversees this transfer process, called “transmission,” to make it smoother for nominees or legal heirs.

SEBI’s guidelines, including the key simplification circular from 2022 (detailed here) and the investor nomination facility page , prioritise nomination as the key to quick and simple settlements. With a nominee in place, transmission involves far less paperwork. Recent changes allow up to 10 nominees per account or folio, with options for percentage allocations and streamlined transfers from nominees to heirs, including tax clarifications that ease the burden.

The Power of Nomination

Adding a nomination is the smartest step you can take to protect your family:

• You can nominate up to 10 individuals for a single demat account or mutual fund folio.
• Specify exact percentages or let them share equally.
• In case of your demise, transmission to nominees requires basic verification only, such as a death certificate, standardised form and updated KYC (PAN, Aadhaar-linked details).
• No need for succession certificates, probate of wills or indemnity bonds.
• The nominee receives the securities or units as a trustee, but recent SEBI clarifications ensure that further transfer to legal heirs is treated as exempt from capital gains tax.

Without nomination, the process gets more involved, particularly for larger holdings.

Transmission with Nomination

When nomination exists for demat shares or mutual fund units:

• Approach your Depository Participant (DP) for demat holdings or the Asset Management Company (AMC)/Registrar and Transfer Agent (RTA) for mutual funds.
• Submit a transmission request form, death certificate and nominee’s KYC and bank details.
• The DP or AMC verifies and transfers the holdings to the nominee’s account.
• For joint holdings, the surviving holder(s) take precedence; nominees step in only after all joint holders are gone.

This typically wraps up efficiently, often within weeks.

Transmission Without Nomination: Thresholds for Simplified Processing

SEBI promotes easier procedures for smaller holdings to reduce hardship:

For values above these thresholds or in cases with disputes:

• Legal documents like succession certificates, probate or court orders become necessary.
• All legal heirs must provide consent or be accounted for.

Physical shares (less common now) require original certificates plus similar steps.

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Special Scenarios and Key Updates

• Multiple Nominees: Pro-rata distribution if one predeceases; equal shares if percentages not specified.
• Joint Holdings: Automatic transmission to survivor(s) without fresh KYC in most cases.
• Minor Nominees: Guardian manages until the nominee reaches majority.
• Nominee to Legal Heirs: Simplified process with a special “TLH” reporting code to ensure tax exemption under Income Tax rules.
• Unclaimed Holdings: Moved to suspense accounts; searchable via SEBI tools.

Documents at a Glance

Standardised forms are readily available on DP, AMC or RTA websites.

People Also Read: What is the Procedure to Obtain a Succession Certificate

Real-World Insights from Investor Complaints and Resolutions

Transmission challenges have surfaced in investor forums and grievance portals:

• Delays or excessive document demands without nomination often lead to escalations, resulting in orders for swift transfer plus compensation for inconvenience.
• Cases where intermediaries insisted on legal representations below thresholds faced directives to comply with simplified rules.
• Rulings consistently uphold the nominee’s trustee role while protecting heir rights.
• Successful resolutions frequently involve affidavits and indemnities sufficing for moderate holdings.
• Recent complaints highlight the value of updated KYC to prevent account freezes.

These experiences drove SEBI’s ongoing refinements for greater consistency.

Practical Tips for Hassle-Free Transmission

You can manage most transmission requests yourself:

• Add or update nominations online through your DP portal or AMC login (up to 10 nominees now supported).
• Maintain clear records of account details, folio numbers and nomination confirmations.
• Share investment summaries with trusted family members.
• Opt for digital submissions where offered; many intermediaries provide tracking.
• Use SEBI-recommended standardised forms to avoid back-and-forth.

Nomination eliminates the majority of potential complications.

Recent Court and Forum Rulings on Securities Transmission

Transmission disputes usually resolve through SEBI’s SCORES grievance portal or consumer forums rather than high courts, but key decisions clarify nominee rights, thresholds, and heir claims. Here are notable examples:

• Shakti Yezdani & Anr. v. Jayanand Jayant Salgaonkar & Ors. (Supreme Court of India, 2023): The deceased shareholder nominated someone outside immediate heirs. Heirs challenged the transmission, arguing nomination overrides succession laws. The Supreme Court (New Delhi) ruled that nomination under Companies Act and Depositories Act only allows quick discharge of company/depository liability, nominee holds as trustee, and legal heirs can claim under personal succession laws (e.g., Indian Succession Act). No absolute ownership for nominee. Takeaway for readers: Nomination speeds access but doesn’t block heirs; use a will for clear intent.
  
• Investor v. Depository Participant (SEBI SCORES Grievance Resolution, 2024–2025 examples): In several anonymized complaints on SEBI’s SCORES portal, nominees for demat holdings below ₹15 lakh faced wrongful demands for succession certificates. SEBI directed DPs to follow simplified rules (indemnity/affidavit only), with quick transmission and warnings to intermediaries. Takeaway: Thresholds are binding, extra demands below limits are unfair and resolvable via SCORES.
  
• Heirs v. Registrar & Transfer Agent (Consumer Forum Cases, 2024): Legal heirs contested a nominee’s mutual fund transmission. Forums (various districts) upheld nominee priority for receipt, requiring heirs to settle separately, no block on transfer. Compensation awarded for delays. Takeaway: Nominees get assets first (as trustee); disputes don’t freeze holdings indefinitely.
  
• Physical Securities Threshold Dispute (District Consumer Forum, 2024–2025): For holdings under ₹5 lakh per issuer, RTAs demanded probate unnecessarily. Forums ordered indemnity-based release, plus costs for deficiency in service. Takeaway: Physical shares have lower thresholds, but simplified options apply, intermediaries can’t ignore SEBI rules.

These rulings and resolutions reinforce nomination’s convenience while protecting heirs, often avoiding succession certificates below thresholds.

Why These Guidelines Help Families

They cut down on unclaimed assets, reduce disputes and provide timely access during bereavement. SEBI also encourages intermediaries to raise awareness about nominations.

When Professional Help Makes Sense

For high-value holdings, no nomination, heir disagreements or need for succession certificates, turn to specialists. The team at ezyLegal offers guidance on obtaining legal heir proofs, affidavits and court documents across India.

Wrapping It Up

SEBI’s transmission framework prioritises ease when nomination is in place, making inheritance straightforward. Even without, thresholds simplify many common cases. Take a moment to review and update your nominations; it’s a small effort that brings big peace of mind for your loved ones.

Frequently Asked Questions on Transmission of Shares, Demat Accounts and Mutual Fund Units of Deceased Holders

Q1. How many nominees can I add to my demat account or mutual fund folio?

Ans1. Up to 10, with flexible percentage allocations.

Q2. Does the nominee become the absolute owner?

Ans2. No, they hold as trustee for legal heirs.

Q3. What basic documents suffice with nomination?

Ans3. Transmission form, death certificate and nominee’s KYC details.

Q4. What is the threshold for simplified transmission without nomination?

Ans4. ₹15 lakh for demat securities per beneficial account; ₹5 lakh for physical per issuer.

Q5. Is a succession certificate mandatory without nomination?

Ans5. Not below thresholds; only for higher values or disputes.

Q6. Is tax payable on transfer from nominee to legal heirs?

Ans6. No, explicitly exempt with proper reporting.

Q7. How does transmission work for joint holdings?

Ans7. Automatically to surviving holder(s).

Q8. Can I change nominations anytime?

Ans8. Yes, unlimited updates allowed.

Q9. What if the nominee is a minor?

Ans9. Guardian operates the account until majority.

Q10. Transmission for physical share certificates?

Ans10. Similar process, plus submitting originals.

Q11. What if heirs disagree?

Ans11. Requires court resolution or orders.

Q12. Are digital transmission requests accepted?

Ans12. Yes, increasingly supported with online tracking.

Q13. What happens to unclaimed securities?

Ans13. Held in suspense; searchable through portals.

Q14. Can I opt out of nomination?

Ans14. Yes, with a formal declaration.

Q15. Fresh KYC for surviving joint holders?

Ans15. Usually not, if already compliant.

Q16. Percentage specification required?

Ans16. Optional; defaults to equal otherwise.

Q17. Foreign residents as nominees?

Ans17. Possible with necessary compliances.

Q18. Transmission involving a will?

Ans18. May need probate in contested cases.

Q19. Separate nominations per folio?

Ans19. Yes, required for each account or folio.

Q20. Compensation for delays?

Ans20. Not standardised like banks, but grievances can lead to forum awards.