Transfer of Securities Held in Demat Form after Account Holder’s Death

Even as you save and invest for the future, prepare for the worst-case scenario. An integral step in this regard is listing a nominee who will inherit your assets, including dematerialised securities held in a demat account. The process of transferring the assets of a deceased person to their nominees or legal heirs is called transmission. Whether you currently have a demat account or plan to open demat account, knowing how transmission works could help.

Transmission process

The transfer of assets held in demat form—whether stocks, bonds, debentures, mutual fund units, or other financial instruments—depends on certain key details:

  • Whether the demat account is held jointly or singly
  • Whether or not there is a nominee
  • Value of the securities held

To begin the transmission process, claimants must submit their claim with the relevant depository participant (DP).

  1. Jointly held demat account with surviving holders

Suppose a demat account is held by three joint holders: X is the first holder, Y the second holder, and Z the third holder. When X passes away, the assets in the account are transmitted to the surviving holders in the order that the account was held. So, following X’s death, the securities are transmitted to Y as the new first holder and Z as the second holder.

To submit their claim, the surviving joint holders have to provide the following documents:

  1. Transmission request form
  2. Notarised/attested copy of deceased person’s death certificate
  3. Client master report of demat account (this provides the names of all account holders, types of holdings, bank account details, nominees, etc.)

In addition, the surviving holders must open a separate demat account. The account holder names should be in the same sequence as in the earlier joint account that will now be closed.

  • Jointly and singly held demat account with no surviving holders

If there are no surviving account holders, the transmission depends on whether a nominee has been listed.

If a nomination has been made: The demat securities will be transmitted to the nominee, who has to submit the transmission request form and an attested/notarised copy of the death certificate of the deceased.

If no nomination has been made: The legal heirs of the deceased must submit the transmission request form. The additional paperwork will differ based on the value of holdings on the day of the application.

  • Value of securities is less than Rs 5 lakh: The claimant must submit the following:
    • Attested/notarised copy of deceased person’s death certificate
    • Affidavit or letter of indemnity
    • No-objection certificate (NOC) from legal heirs
      OR family settlement deed
    • Client master report of demat account

    • Value of securities is more than Rs 5 lakh: The claimant will additionally have to provide the following:
      • Copy of probate of will
        OR attested/notarised copy of letter of administration

OR attested/notarised copy of succession certificate

OR order of a competent court to support the claim

  • Attested/notarised copy of deceased person’s death certificate
    • Client master report of demat account

Summing up

The Securities and Exchange Board of India (SEBI) has mandated that listed companies ensure the transmission of demat securities within seven days of receiving the required paperwork. However, if you open demat account, list a nominee at the outset to simplify the transmission process further. Claimants themselves must open a demat account with a registered DP like Kotak Securities to facilitate the transfer.