Transfer Inherited Shares in India – How Can I Get These Shares?
Demat accounts usually have a nomination requirement when they are opened in any bank. The transfer inherited shares where nomination exists to make them easier to be transferred.
However, there may be situations where there can be no nominees. Let us first look at the transfer process when Nominee exists.
For those who are not easy with the security accounts and terms used in India, a brief explanation of the abbreviations used in this article are mentioned below so that readers can understand this article better.
Demat account is just another bank account where securities are held.
Depository Participant (DP) refers to the institutions like the bank, where the demat account is held
Portfolio Investment (NRI) Scheme (PINS) is a system of the Reserve Bank of India
o PINS account can be started in designated branches of banks.
o Only an NRI/PIO can start a PINS account.
o NRI/PIO can create PINS account with only one bank at a time
Secondary market refers to a market in which securities are traded [Stock Exchange]
Primary Market is where securities are publicly offered for subscription to raise capital
Transfer inherited Shares to Nominee
Nominees, if they do not already have a demat account, should open a new demat account. If the nominee is an NRI, the nominees/heirs may open a Non-PINS- Non-Repatriable Demat account. This account is required because securities are by rule, transferred to these accounts.
Procedure for Transfer Inherited Shares – NRI
The nominee shall require the Depository Participant (DP) in writing to submit the securities covered by the nomination to the account of the Candidate.
A certified copy of the death certificate should be included in the transfer application.
As soon as the shares are transferred to the NRI account (Non-PINS Non-Repatriable) account of the legal heirs, they can change these shares:
In the secondary market without PINS/RBI approval.
o No PINS approval is required for the sale of inherited shares.
o If additional transactions in the secondary market are to be conducted, then PINS approval is required.
NRI does not need RBI permission to hold and transfer shares acquired through inheritance through the transfer of shares.
As per provisions of Section 6(5) of FEMA 1999, a person who is a citizen outside India can keep, own, transfer or invest in the Indian currency, security or immovable property which is resident in India, if Such currency, security or property was acquired, held or owned by such person when he resided in India or was inherited by a person resident in India.
Transfer inherited shares if no nomination in the Demat account
If the nominee is not mentioned in the demat account or if there is death of the account owner, the legal heirs or the legal representatives may apply to the Depository Participant (DP) to transfer inherited shares lying in the account of the deceased to the account of the legal heirs or legal representatives.
The following documents are essential:
- A copy of the death certificate that has been duly certified.
- A copy of the succession certificate which has been duly notarized or an order of a court of competent court if the deceased has left no Will
- A copy of the Probate or Letter of Administration duly notarized.
- The legal heir can find it easier if they first open an account with the DP where shares are held.