Transmission of Shares: How Demat Holdings Move to a Nominee or Legal Heir

Transmission of shares is the paperwork nobody wants to think about, and almost every family ends up dealing with it. When a shareholder dies, the shares in their demat account don’t simply pass on by themselves. Someone has to claim them, prove who they are, and get the depository participant (DP) to move the holdings into their own account. Get the documents right and it’s a few weeks of form-filling. Get them wrong and the account can sit frozen for months. SEBI rewrote the rules in July 2026, so a lot of older advice floating around online is now out of date. Here’s how the current process works, with worked examples.

What transmission of shares actually means

A transfer is when you sell or gift shares to someone. A transmission is when shares move because the holder has died. The difference matters for two reasons. First, the documents are completely different. Second, tax: under clause (iii) of Section 47 of the Income Tax Act, 1961, this kind of passing on of assets isn’t treated as a “transfer” at all, which is why no capital gains tax should arise when shares are simply transmitted.

The current framework comes from SEBI’s circular of July 23, 2026 on simplifying and standardising transmission of securities. It applies to listed companies, registrars (RTAs), depositories, DPs and mutual fund AMCs alike, and it took effect 30 days after it was issued. The idea is that the same claim should need the same documents whether you approach your DP, a company’s RTA or a fund house.

One limit is worth knowing at the outset. The framework doesn’t apply where there’s a dispute or competing claims between heirs. In those cases SEBI says the claimants have to settle the matter through judicial or legal proceedings first.

Three routes, and which one you’re on

Before anyone asks you for a single document, the DP will sort the claim into one of these situations:

• Surviving joint holder. The account was held jointly and at least one holder is alive.
• Nominee. The deceased was the sole holder (or all joint holders have died) and a nomination was registered.
• Legal heir or claimant without nomination. No nominee exists, so the heirs have to establish their claim. This is the route where value thresholds kick in.

CDSL’s communiqué to DPs of August 21, 2026 lays out the same flow: death intimation, the DP explains the requirements, documents come in, the DP scrutinises them and identifies the category, then checks for deficiencies before approving.

Joint holders: the easiest case by far

If the account had a second holder who’s still alive, the shares go to them under the rule of survivorship, as long as the company’s articles don’t say otherwise. SEBI’s circular is blunt here. The processing entity must not ask the surviving joint holder for KYC documents, indemnities or undertakings. A copy of the death certificate is all it can ask for.

CDSL’s process adds one practical point. If the surviving holders want to keep using the existing demat account rather than open a fresh one, they sign a name deletion request so the deceased holder is removed from it.

This is the strongest argument for joint holding between spouses. It doesn’t replace a nomination, but it makes the first death almost administrative.

When there’s a nominee

A nominee has a light document list. Under the July 2026 framework, the nominee submits:

• the transmission request form (SEBI’s standard format);
• the latest client master list (CML) of the nominee’s own demat account;
• a verifiable death certificate;
• a copy of the statement of account, or the original share certificates for physical holdings.

No indemnity bond, no affidavits from other family members, no succession certificate. That’s the whole point of nominating someone.

Now the part people misunderstand. SEBI’s circular says the nominee receives the assets as a trustee on behalf of the legal heirs. Nomination makes the handover clean. It doesn’t decide who ultimately owns the shares. If a will or succession law gives the shares to someone else, the nominee is expected to pass them on.

A nominee is a safe pair of hands for the shares, not automatically their final owner. Nomination gets the shares out of the frozen account quickly; the will or succession law decides where they finally land.

Two more details from the circular. If one of several nominees dies before the investor and nobody updates the nomination, that nominee’s share is split pro rata among the surviving nominees. And once the entity has transmitted the shares to the nominee, it is fully discharged of its liability.

The tax snag when the nominee passes shares to the heir

This second hop, nominee to legal heir, used to cause grief. As SEBI’s circular of September 19, 2025 explains, the nominee could get assessed for capital gains tax on the move, even though Section 47(iii) exempts it, and then had to chase a refund. The fix: from January 1, 2026, RTAs, listed companies, depositories and DPs report these moves to the CBDT with a standard reason code, “TLH” (Transmission to Legal Heirs). If you’re a nominee handing shares to an heir, it’s worth confirming with your DP that the transaction is being reported under that code.

No nominee: the value thresholds decide your paperwork

This is where the July 2026 changes matter most. SEBI created a new low-value category called Quick Transmission Processing (QTP) and raised the simplified-documentation limits. For demat holdings, the thresholds are counted per beneficial owner:

Two footnotes from the circular. A listed company can choose to raise the ₹10 lakh simplified limit for physical shares at its discretion. And the value is worked out using the previous closing price on any recognised stock exchange; for mutual fund units, the last available NAV. CDSL’s process note tells DPs to use the previous day’s closing price from the date the request reaches them.

Every claim without a nominee starts with the same common documents: the transmission request form, the latest CML of the claimant’s demat account, a verifiable death certificate, and the statement of account or original certificates. Then the category adds its own layer.

QTP: small holdings, close family only

For holdings up to ₹30,000 in demat, the claimant signs a transmission request form-cum-undertaking on plain paper and attaches a document proving their relationship with the deceased. No stamp paper, no notary. The catch is that QTP is only open to immediate relatives: parents, spouse, children and parents-in-law. A sibling or nephew claiming a small holding doesn’t get this route.

Simplified documentation: up to ₹30 lakh

Above ₹30,000 and up to ₹30 lakh, the claimant adds:

• a notarised indemnity bond protecting the DP or RTA; and
• a notarised affidavit-cum-NOC from all legal heirs confirming who they are, the claim and their no-objection, or a copy of a family settlement deed signed by all legal heirs and attested by a notary or gazetted officer, or accepted by a magistrate, judge or civil court.

Both the indemnity and the affidavit-cum-NOC go on non-judicial stamp paper of the value fixed by the Stamp Act of the state where the claimant lives. If the claimant already has a court document (succession certificate, probate, letter of administration or a court decree), the indemnity bond and the NOC from non-claimant heirs aren’t needed.

Above ₹30 lakh

Bigger holdings need the affidavit-cum-NOC from all legal heirs plus one of the following:

• a copy of the will, as applicable under the Indian Succession Act, 1925, with a notarised indemnity bond from the heirs receiving the shares;
• a legal heirship certificate from a revenue authority not below a Tehsildar, with a notarised indemnity bond;
• a succession certificate, letter of administration or court decree.

Notice what’s missing: probate. The circular explicitly removes the mandatory requirement of probate of a will, in line with changes to succession law. Getting probate means a court process, so dropping it as a must-have is a real relief for families. The entity can still ask for extra documents in above-threshold cases, but it has to record its reasons in writing.

Worked examples

The figures below are made up to show how the categories work. They don’t refer to any real investor or stock.

Example 1: the small account. Meena’s father held a handful of shares worth ₹24,000 at the previous day’s close, with no nominee. She’s his daughter, so she qualifies for QTP. She submits the common documents, the plain-paper form-cum-undertaking and something proving the relationship. No notary, no stamp paper.

Example 2: same value, different claimant. Now suppose the same ₹24,000 holding is being claimed by the deceased’s brother. The value fits QTP, but a brother isn’t on the list of immediate relatives. So this claim goes into the simplified category: indemnity bond and affidavit-cum-NOC from all legal heirs (or a family settlement deed), both notarised.

Example 3: the mid-sized portfolio. Rahul’s mother had ₹18 lakh in shares and ETFs, no nominee, and three children. Rahul is the claimant. At ₹18 lakh the claim sits in the simplified bracket. He needs the indemnity bond, and either a notarised affidavit-cum-NOC from all three siblings or a family settlement deed they’ve all signed. If his siblings won’t sign, the framework doesn’t help; that’s a dispute, and it moves to court.

Example 4: the value moves. Say a portfolio was worth ₹29 lakh last month and ₹31 lakh at the previous close before the claim is filed. Because value is measured off the previous closing price when the request comes in, the claim is above threshold and needs a will, a legal heirship certificate or a court document. It’s a good reason to file promptly once you have the papers, and to check the value yourself before choosing which form set to prepare.

Death certificates, overseas deaths and physical shares

“Verifiable death certificate” has a precise meaning in the circular. It can be the original (or a copy attested by the nominee and checked against the original), a copy attested by a notary, gazetted officer or Judicial Magistrate First Class, or a death certificate with a QR code. The QR-code option is new and saves a trip to the notary.

For a death abroad, the entity will accept a certified copy certified in that country by a court, magistrate or notary, consularised by the Indian embassy, apostilled, or certified by an overseas branch of an Indian scheduled commercial bank or a foreign bank with an Indian correspondent relationship. A certificate in another language needs a self-certified English translation alongside.

If the deceased held old paper share certificates, the claimant needs the original certificates. After processing, the RTA doesn’t issue new paper. It initiates a demat conversion so the shares land straight in the claimant’s demat account. So the claimant needs a demat account before starting.

How long it should take

SEBI puts a hard number on it. The entity must process a transmission within 21 calendar days of receiving all the required documents. If it rejects the claim or misses the deadline, it has to tell you why in writing. The entity must also acknowledge your claim when you submit it and, at that time, list anything missing or incorrect, rather than drip-feeding objections. That clock only starts once the file is complete, so a missing paper costs you time before the countdown even begins.

The 21-day clock starts when the file is complete, not when you first walk in. A careful first submission is the fastest route.

What you can do today so your family has an easier time

• Register a nominee on every demat account. It turns the hardest route into the easiest one. Check your CML to see what’s on record.
• Consider joint holding with your spouse for the main account, so survivorship applies.
• Dematerialise old paper certificates. Lost originals turn a transmission into a duplicate-plus-transmission case.
• Keep an up-to-date list of your accounts: DP names, client IDs and fund folios, somewhere your family can find it.
• Make a will, especially if your holdings run past ₹30 lakh, since it’s one of the accepted documents above that level.

Transmission also tends to throw up housekeeping: dormant accounts with annual maintenance and DP fees (our guide to DP charges explains what you’re billed for), and odd quantities that are awkward to sell, which our piece on odd lot trading on NSE covers. Planning for this sits naturally alongside the rest of your risk management.

Transmission of shares in short

Transmission is how shares move after a holder dies. A surviving joint holder needs only a copy of the death certificate. A nominee needs four basic documents but holds the shares in trust for the legal heirs, and the nominee-to-heir move should be reported under the “TLH” code so it isn’t taxed. Without a nominee, the value of the demat holding at the previous close decides the route: QTP up to ₹30,000 for close family, simplified documents up to ₹30 lakh, and a will, heirship certificate or court document above that. Probate is no longer mandatory, and the DP or RTA has 21 calendar days once your documents are complete.

Disclaimer: This article is for education only and is not investment, legal or tax advice. The names and values in the worked examples are hypothetical. Rules and forms can change, so check the latest requirements with your depository participant or the company’s RTA, and consult a qualified professional for your specific situation.