These new provisions are expected to help heirs access securities faster.
The Securities and Exchange Board of India (Sebi) has approved a simpler and standardised framework for transmitting securities after an investor's death.
These new provisions are expected to help heirs access securities faster.
Key Points
- Sebi has introduced a simplified framework to speed up transmission of securities to legal heirs after an investor's death.
- The reforms remove mandatory probate in many cases and increase thresholds for simplified documentation across physical and demat holdings.
- Combined affidavit-cum-NOC forms, QR-enabled death certificates and easier foreign document verification aim to reduce delays and paperwork.
- Experts say inconsistent practices by intermediaries and difficulties identifying scattered investments could still delay transmission in some cases.
- Investors should maintain nominations, update KYC records and dematerialise physical shares to ensure smoother transmission for beneficiaries.
Why heirs struggle
In the case of small holdings, the legal cost of obtaining probate or succession certificates can exceed the value of the securities, prompting families to abandon the claim.
Dealing with multiple intermediaries and meeting their varied documentation requirements creates uncertainty and delay.
Overseas families face hurdles in the verification and acceptance of foreign documents.
How Sebi's framework could help
The new norms are expected to ease heirs' burden.
Quick transmission processing: Experts are optimistic about this route.
"It recognises that low-value claims should not be subjected to the same level of scrutiny as larger claims," says Abhishek Paliwal, partner, King Stubb & Kasiva, Advocates and Attorneys.
Limits for simplified documentation hiked: The earlier limits for simplified documentation had become unrealistic as stock values rose.
"By increasing these thresholds, Sebi has extended the benefit of easier compliance to a much larger segment of investors and their families," says Sonam Chandwani, managing partner, KS Legal & Associates.
Probate Requirement Removed
Relaxation on probate: This provision can reduce delay and costs, especially where there is no dispute over the genuineness of a will.
"This reform may have the most meaningful impact on timelines," says Paliwal.
Affidavit-cum-NOC: The new framework permits a combined affidavit-cum-no-objection certificate (NOC).
"This should reduce paperwork, lower execution costs and limit technical objections," says Paliwal.
QR code-enabled death certificates: "Such certificates should make verification easier and reduce avoidable procedural objections," says Paliwal.
Eased verification of foreign death certificates: This provision is expected to help non-resident Indians (NRIs) and globally mobile families.
"It should reduce the expense and delay associated with obtaining apostilles and consular certification," says Chandwani.
Issues remain
The success of the framework will depend on intermediaries.
Differences in interpretation across market participants can still lead to inconsistent documentation practices.
"Some intermediaries may continue to seek additional documents to guard against future liability," says Chandwani.
Securities spread across dematerialised (demat) accounts, trading accounts, etc. can make asset identification difficult.
"The absence of a centralised way to locate the deceased investor's complete securities portfolio may continue to cause delays," says Amit Kumar Nag, partner, AQUILAW.
"Old physical share certificates could still create hardship," says KC Jacob, partner, Economic Laws Practice.
Low investor awareness about nominations, estate planning and updated records also remains a concern.
"Families may continue to face difficulties where investors have not maintained proper records," says Jacob.
Larger portfolios will still require more extensive documentation.
Investor Action Checklist
Investors should maintain a consolidated record of all their investments.
They should register nominations across all securities and investment products and update them after major life events.
They must also keep their know-your-customer (KYC) details and contact information up to date with all intermediaries.
Those holding physical share certificates should have them converted into demat form.
Demat Account Claims
Nominees and heirs should check whether valid nominations exist, then approach the relevant depository participant or registrar.
"They should keep the death certificate, identity documents, proof of relationship and other prescribed documents ready," says Nag.
Nag adds that a claimant who has to receive securities in demat form should have an active demat account.
Key changes Sebi has introduced
- Quick Transmission Processing (QTP) route for small claims with limits: Rs 10,000 for physical holdings, Rs 30,000 for demat.
- Simplified-documentation limits doubled: Rs 10 lakh for physical, Rs 30 lakh for demat per beneficial owner.
- PAN submission requirement removed.
- Mandatory probate of will requirement removed.
- Combined affidavit-cum-NOC allowed.
- Death certificates with QR code to be accepted.
- Additional routes for foreign death certificate verification via bank route allowed.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff
