The Transmission of Shares refers to the process by which the ownership of shares is transferred due to specific circumstances such as the death, bankruptcy, or incapacity of a shareholder. Unlike a transfer of shares, which is a voluntary act initiated by the shareholder, a transmission is an involuntary process governed by law. Understanding the intricacies of this process is essential for companies and claimants alike.
Key Aspects of Transmission of Shares
Circumstances Leading to Transmission: The most common scenarios for share transmission include the death of a shareholder, insolvency, or legal incapacitation. In such cases, the shares are not sold or transferred willingly but are passed on to legal heirs, representatives, or other authorized parties.
Role of Legal Representatives: When a shareholder passes away, the legal representatives or nominees of the deceased must submit the required documents to the company. These often include a death certificate, probate or succession certificate, and a copy of the will, if applicable.
Company Procedures: Companies have specific processes to handle the transmission. Once all necessary documents are received and verified, the company updates its register of members to reflect the new owner(s) of the shares. The Articles of Association (AoA) of the company often outline the detailed procedures for share transmission.
No Stamp Duty: Unlike a share transfer, a Shares Transmission Procedure is exempt from stamp duty as it is not considered a sale or voluntary transaction.
Challenges and Precautions
The transmission of Share Claimers can involve challenges, such as disputes among heirs, delays in documentation, or legal complexities. To minimize these issues, shareholders are encouraged to nominate individuals for their shares, maintain up-to-date wills, and ensure that all legal records are properly documented.