Nomination in shares

by Bizopedia · January 11, 2022

What is Nomination in shares?

Nomination is an act of nominating a person in whom the shares would vest in the event of death of the shareholder. Post the death of the shareholder, nominee is entitled to the rights, dividend and interest in relation to shares which were held by the deceased shareholder.

Nomination can only be made by either individual or joint shareholders of a public limited company. A person other than a trust, society, body corporate, partnership firm, Karta of Hindu Undivided Family or a power of attorney holder, can be a nominee. A minor can also be made nominee provided a guardian is there to take care of minor. A non resident individual can also be made a nominee

Procedure for a nomination

Nomination Shareholders can nominate a person by filling Form SH1 mentioning details of customers and shares to be transferred in case of death. Company need to register name of the nominee in their records within 2 months of receipt of Form SH1. In case of joint shareholders, Form SH 13 need to be filed

Transfer of share to nominee

A company has to maintain a Register of nominations filed with it and registered by it. The contents of the register have to be eventually updated and duly authenticated by the Company Secretary or such other person as may be authorized by the board. Post receipt of intimation of death of a shareholder, company secretary has to verify for any nomination in register of shares.

Once a nomination has been verified by the company, a nominee can either register shares on his name or transfer shares to other individual. If the nominee wants to become a shreholder of the company then he needs to intimate company about the same by serving a valid notice along with a certificate.

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