What is meant by transmission of shares? What are statutory

What is meant by transmission of shares? What are statutory provisions regarding transmission of shares?

Ans.

MEANING OF TRANSMISSION OF SHARES

Transmission of shares means transfer of title in the shares by operation of law. On the death, insolvency or the lunacy of the shareholder, his shares would west in his legal representative, receiver or administrator. Transmission of shares implies succession of shares on the death or insolvency of an individual shareholder or if the member. is a limited company, on its going into liquidation. Due to involuntary assignment of shares, the property passes by operation of law without a formal instrument and without consideration.

No written instrument is required in transmission of shares. The inheritor can transfer the shares and has the same right as a member of the company.

[Section 56]

STATUTORY PROVISIONS REGARDING THE TRANSMISSION OF SHARES

On the death of a member, or on his becoming insolvent, his legal representative must produce evidence. He is entitled to be registered as the holder of shares.

Right of the Nominee: If the person being nominee, so becoming entitled, ejects to be registered as holder of the share or debenture himself, he shall deliver or send to the company a notice in writing signed V>v him stating that he so elects. Such notice shall be accompanied with the d ‘h certificate of the deceased shareholder or debenture holder.

All limitations, restrictions and provisions of the Companies Act, 1956 relating to the right to transfer and the registration of transfers of shares or debentures shall be applicable to the notice or transfer referred to above as if the death of the member had not occurred and the notice of transfer were a notice signed by that shareholder or debenture holder, as the case may be.

Dividend etc.: A person, being a nominee, becoming entitled to a share or debenture by reason of the death of the holder, shall be entitled to the same dividends and advantages to which he would be entitled if he were the registered holder of the share or debenture. But he shall not he entitled, before being registered as a member, to exercise any right conferred by membership in relation to meetings of the company.

Notice by the Board: The Board may, at any time, give notice requiring the person becoming entitled to a share or debenture by reason of the death of the holder to elect either to be registered himself or to transfer the share or debenture. If the notice is not complied with within 90 days, the Board may thereafter withhold payment of all dividends or bonuses or other moneys payable in respect of the share or debenture, until the requirements of the notice are complied.