In a bid to alleviate the sufferings of investors in transmission of shares, a Securities and Exchange Board of India (Sebi) working group has recommended a threshold limit up to which the companies would require only an affidavit, deed of indemnity and no objection certificate from other legal heirs.

Transmission involves devolution of title to shares — otherwise than by transfer — like devolution by death, succession, inheritance, bankruptcy and marriage. The group has proposed that companies, depositories, recognised investors’ associations and Sebi should embark on a special drive to urge shareholders to utilise nomination facility. “Depository beneficial owner accounts opened on or after October 1, 2007, should mandate nomination at the account opening stage itself,” it said.

In relation to beneficiary owner account in joint names, the group has suggested that on the death of one of the account holders, a new account should be opened automatically, subject to updation wherever applicable, based on existing documents. Transmission is different from transfer as in transmission a person acquires an interest in the property by operation of law, such as by right of inheritance or succession, whereas transfer is effected by act (free volition) of the parties. In transmission, where title to shares are passed by operation of law, the beneficiary need not carry out further formalities such as duly executed stamped instrument of transfer as stipulated in Section 108 of the Companies Act, 1956. The company concerned also cannot insist on such formalities.