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Difference between transfer and transmission of shares

Difference between transfer and transmission of shares

Share ownership changes comprise complex legal procedures governed by multiple regulations to protect investor rights. For smooth co-owner adjustments, grasping the core process difference between share transfer implying sale/gifting against transmission occurring due to inheritance/registered wills remains crucial. 

This blog aims at simplifying concepts for readers through a Share Transfer Vs Transmission distinction elaborating situations, procedures, documentation, timeline and cost nuances across both to equip investors to handle ownership change formalities seamlessly.

Owning shares of publicly listed companies, whether in physical certificate form or dematerialized format, makes one a part owner entitled to associated rights and dividends declared. However, the aspects governing ownership change of these securities through processes like share transfer and transmission continue mystifying average retail investors unfamiliar with intricate protocols and legalities involved.

This necessitates clearly distinguishing between the voluntary ownership transfer mechanisms between two living eligible entities against involuntary transmission claims staked by legal heirs on the original shareholder’s demise. Grasping differences assumes greater significance given faulty regulatory adherences can void rights entitlements causing severe losses for stakeholders.

Share transfer refers to the structured process allowing legal change of a company’s share ownership between two willing parties – the transferor (seller) and transferee (buyer), making the latter entitled to all benefits henceforth. This amounts to transferor voluntarily divesting ownership rights of the securities in consideration for an agreed monetary payment or gift purpose transferring rights to the transferee through submission of regulatory paperwork like share transfer deeds.  

On the contrary, share transmission relates to automatic inheritance and vesting of shares held by a single shareholder under his/her name to nominee(s) or legal heirs immediately on demise as per succession hierarchy. This does not require any explicit transfer consent or paperwork from successors rather gets initiated by issuers based on succession document submission. While transfer requires mutual consensus between parties, transmission occurs by default to claimant successors eliminating voluntariness aspects.

Another key difference is around parties involved during ownership change execution. Share transfer always necessitates the active involvement of two legally eligible living parties – the transferor who wishes to sell/gift the securities and claims associated rights or dividends and the transferee who assumes ownership based on agreed sale consideration. Transmission however involves the deceased shareholder who held the shares under his/her name and the legal heir(s)/nominee(s)/administrator claiming rightful ownership upon providing valid documents supporting succession hierarchy claims.

Further on the documentation front, share transfer would need strict submission of a SH4 transfer form signed by both parties clearly mentioning security details like certificate numbers, amounts, witness signatures and bank attestation affirming sale/gift agreement terms between buyer and seller. Share transmission however warrants providing the issuer transmission form, death certificate copy of deceased shareholder plus legal heirship succession document establishing applicant’s legitimacy like nomination registration extract or swearing of affidavit from surviving legal heirs relinquishing ownership claims allowing transmission to applicant based on hierarchy. 

Additionally while share transfer applications necessitate providing payment evidence like an endorsed cheque copy or bank receipt showing sale consideration settlement between parties, transmission requests don’t require similar monetary proof as shares get transmitted automatically to successors not requiring financial exchange.

In terms of process execution timelines, regulations prescribe listed companies must complete share transfer registration formalities within 1 month or 15 days for physical or demat shares respectively after receipt of correctly filled applications and documentation from requesting entities. Violations make companies liable for penal interest payments recoverable by aggrieved shareholders on delays. For transmission, longer time frames between 1-3 months apply recognizing complexities involved in claimant successor verification based on succession hierarchy compared to dealing with living transferor-transferee parties. Intimations should be sent within 20 days from transmission requests apprising applicants of the application receipt, processing stage clarifying next steps.

Finally, the applicable regulatory charges differ substantially too for both events. Share transfers entail multiple associated costs like broker facilitation charges on initiating transfer requests, stamp duties levied on the transfer form valuation, regulatory fees charged by registrars for ownership change processing plus service charges and courier expenses physically delivering fresh certificates in the new owners name. Securities premium might also be attracted during high value transfers. However for share transmission to legal heirs or nominees, companies don’t levy processing charges except statutory levies like fees for procuring legal heirship certificates from district collector offices or submission fees on probated will copies if required during claimant verification by issuer’s RTA.

In summary, while on the surface share transfer and transmission appear similar implying changes in securities ownership, clarity on aspects like voluntary seller-buyer mutual consent against involuntary automatic legal vesting to successors, documentation requirements revealing nature of ownership change, timelines recognizing complexities involved and costs applicable during both events determines adhering to accurate process protocols by investors seeking alterations in shareholdings. This becomes vital to avoid future disputes or losing securities ownership rights altogether due to regulatory non-compliances arising out of lack of distinction across both procedures.

Share Transfer Meaning 

Share transfer refers to the voluntary process involving legal change of a company’s share ownership between two living eligible parties through sale or gift. This transfer of rights requires adhering defined regulatory protocols like documentation submission, verification and consideration payment prior to company/registrar approval updating records in the name of new holder.

Thus any share ownership transfer amounts to transferor (seller/giver) willfully divesting rights to the shares in favor of a transferee (purchaser/receiver) initiated by both parties through a formal share transfer application.

Why Share Transfers Occur?

Common scenarios warranting share ownership transfers include:

1. Sale Transaction – Original holder transfers shares against monetary consideration to buyer through share transfer deed.

2. Gifting – While gifting shares, the transferor voluntarily gives securities to another eligible recipient without monetary exchange through a gift deed.

3. Lending Shares – Securities lending against collateral also entails temporary transfer of shares from lender to borrower and reversion post lending period.

4. Transmission Errors – Incorrect recording of shares under joint ownership structures can require technical transfers for rectifications. Eg: Grandparent – father – child shares getting recorded only under grandparent requiring a technical transfer through father for lineage correction. 

Thus share transfers encompass a variety of situations involving change of legal ownership from one party to another related/third party entities.

Share Transfer Process

The key procedural steps involved during a share transfer between two parties are:

Step 1) Purchaser and Seller Agreement 

Entities involved first finalize terms of share transfer through sale consideration or gift value agreement mentioning security details like number and face value of shares along with sale amount for executing contract note or gift declaration draft.

Step 2) Documentation Requirements

Upon mutual consensus regarding share transfer terms, requisite regulatory application documents need to be submitted in the correct format signed by both parties. This includes:

-Transfer Deed Form SH4 – Contains transferor and transferee details, number of securities being transferred, consideration amount, certificate numbers duly signed by seller and buyer

-Share Certificate(s) – Original share certificate(s) of security being transferred

-PAN Card Copies– Self-attested PAN copies of both transferor and transferee

Additionally documents like corporate authorizations, death certificates etc. also need to be attached for specialized transfer cases like institutional trades or release of deceased pledge shares.

Step 3) Physical Verification

The investor/broker submits signed transfer documents along with original share certificates to the company registrar and transfer agent (RTA) responsible for verification. Physical verification is done to check submitted documents are valid and certificates are authentic prior to initiating electronic transfer request.

Step 4) Realization of Consideration Amount

For sale transactions, only after the RTA confirms validity of submitted documents, the transfer amount gets released to the seller through cheque/electronic modes after deduction of taxes like STCG if applicable. 

Step 5) Company Approval

Post satisfactory physical verification, a transfer request gets logged into the company records awaiting approval by competent authorized signatories like Managing Director, Company Secretary or through a Transfer Committee constituted per company articles rules.

Step 6) Title Transfer

Upon securing company approval, share certificates undergo cancellation for issuance of new certificates under the name of the transferee for updating ownership change. In case of demat shares, account debits/credits automatically reflect changes.

Step 7) Intimation to Parties

With title changes effected across records through new certificates or demat credit, an intimation notice gets released to both parties confirming completion of share transfer ownership change. Original share certificate(s) submitted also get canceled overtly through perforation cuts.

Thus share ownership legally changes hands from seller to purchaser on meeting these regulatory requirements ensuring investor rights protection.

Timeframe for Completing Share Transfer 

As per SEBI regulations, listed companies have to complete share transfer formalities within 15 days for demat requests and 1 month for physical share certificates submitted after receipt of documents. Delays beyond prescribed timelines make companies liable for penal interest payments to aggrieved shareholders.

In case of rejections due to documentation discrepancies or company declines transfer on specific grounds, intimation should be sent to the applicant within 30 days from receipt detailing rejection reasons for corrective measures.

Share Transfer Charges/Fees

While companies don’t levy specific charges for share transfers, associated costs arise on account of:  

1. Stamp Duty – Levied on transfer form as percentage of consideration amount both under physical or demat mode. Rates differ across states falling between 0.005% – 1% based on state laws.

2. Transaction Charges – Brokers facilitate the transfer process for clients in exchange for fixed fees around ₹100-500 per request plus applicable taxes.

3. Securities Premium – For high value/premium security transfers, companies might charge additional premiums to prevent value erosion through transfers.

4. Service Charges – Registrars levy fixed slab fees like ₹50 per certificate + courier/postal charges for physical delivery of certificates on successful transfers.

5. Demat Charges – In case of demat transfers through a Depository Participant, nominal charges get levied per script for handling delivery requests.

While physical mode tends to have higher transfer costs due to stamp duties and logistics expenses, charges are minimized in demat format transfers due to lower paperwork.

Transfer Vs Transmission Core Difference  

While transfer refers to voluntary ownership change between two living eligible entities, transmission relates to automatic vesting of shares under Inheritance laws post demise of original shareholder through succession rights or execution of legally registered wills bestowing the securities to nominees.

Thus transfer requires explicit intent from involved parties rather than default transmission to legal heirs on death. The core differences stand clear from the table below:





Sale, Gift or Lending Agreement

Death of Securities Holder

Parties Involved

Legal Transferor & Transferee

Deceased and Legal Heir(s)

Voluntary Action

Requires Joint Request

Automatic Vesting to Nominees


Transfer Deed with Consideration Details

Death + Succession Proof Documents


15 Days Demat/1 Month Physical

1-3 Months


Applicable like Stamp Duty, Trading Fees etc

Generally Nil

This fundamental distinction on voluntary transfer between living eligible entities against involuntary transmission to legal heirs arising due to succession needs clear understanding to avoid mix up when changes in share ownership occur.

Having understood the transfer construct, let’s proceed towards elaborating on the transmission process.

What is Share Transmission?

Share transmission refers to the process whereby listed company shares held with a single or joint shareholder get transmitted automatically to the legal heir(s), nominee or rights successors immediately on demise of the original shareholder.

Share transmission occurs based on cascading hierarchy involving nominee first, then joint holder secondly or finally legal heirs through a will or succession laws in the absence of either. Nomination helps avoid complexities around succession or probate proceedings allowing smoother vesting of shares with intended beneficiary through transmission. 

Why Share Transmission Occurs?  

Common scenarios leading to share transmission majorly surround death of the original shareholder with securities legally getting transmitted to legal successors based on:

a) No Nominee Registered

– Will execution bequeathing shares to successors

– Through Succession laws like intestate property rules on no will 

b) Nominee(s) Registered

– Direct vesting based on shareholder nomination form directive 

– Rejection of shares by Class I heirs with limited rights allowing Class II nominee transmission

Thus the demise of shareholders along with nomination or adequate succession planning facilitates transmission avoiding complex legal battles over securities ownership by staking succession claims.

Share Transmission Documentation Requirements

With share transmission occurring only due to the original holder’s death, following documents need submission for company records change by heirs/nominees/administrators:

1. Transmission Form SH-14 – Contains details of securities held in the deceased person’s name along with particulars of the applicant successor entity. Needs attestation by witnesses/notary public. 

2. Death Certificate – Original copy showing demise of the security holder  

3. Succession/Legal Heir Proof – Will copy or documents certifying applicant claim as legal heir through succession laws like affidavit from other heirs renouncing rights.

4. Nominee Attestation – In case a nominee is applying, a copy of the nomination is registered with the company in the deceased shareholder’s folio.  

Note – PAN card and address proof of successor entity also required like normal share transfer. Additional entity documents like probated copy of will, Administration Deed, NOC from other legal heirs etc. might be warranted in certain cases during transmission.

Share Transmission Approval Process 

The key steps involved during the share transmission process to legal heirs/nominees/administrators are:

Step 1) Claim Lodging with Company

Successor entity approved under will/legal heirship provides transmission request application enclosing requisite documents to registrar or company directly.

Step 2) Verifying Successor Claim Legitimacy 

The company registrar does thorough verification of all documents assessing whether the successor entity has legitimate rights for transmission based on will, nomination or legal heir status establishment. Queries may be raised seeking additional supporting documents. 

Step 3) Transmission through Approval

Upon satisfactory documentation verification, the company provides approval for transmission confirming identity and rights of the successor facilitating the transfer to facilitate ownership change. 

Step 4) Facilitating Share Vesting

Post approval, shares either get transmitted to the existing Demat account of the successor or transmitted in physical mode through certificates carrying the same existing folio number of deceased holders under the legal heir’s/nominee name based on applicant preference.

Step 5) Recording Transmission

Finally intimations get sent recording transmission across company records and demat statement of accounts with suitable notes on ownership change through vesting under successor entity completing the entire process.

Timeframe for Share Transmission Completion

Considering complexities in evaluating legal heirship claims, longer regulatory timelines exist for transmission process completion. 

SEBI mandates transmission formalities must conclude within 1-3 months from submission date based on whether shares are held in physical or demat mode.  

Non-adherence by companies requires compensating legal heirs through penal interest payment similar to transfer delays. Status updates must be shared within 20 days detailing transmission request processing stage clarifying anticipated completion timelines.

Charges Applicable for Share Transmission 

Unlike monetary considerations governing transfer processes, transmission occurs through default inheritance devoid of share sale aspects. Hence companies don’t levy charges for transmission formalities except:  

– NOC Charges – If RTA needs procuring legal heirship NOC from district collector offices, associated facilitation fees might apply

– Will Probate Fees – In case will copy probate gets required for certifying its validity, state level court fees needs payment 

Note – Government levies like stamp duty etc. if arising need payment during transmission request by applicants.

Thus barring minor documentation facilitation or statutory levies, companies don’t impose specific fees for share transmission to legal heirs.

Thus transfer amounts to active change in ownership between two living entities based on mutual consent implying a sale or gift agreement. Transmission constitutes involuntary succession following shareholder death either through registered nomination directive or legal heirs staking succession claims establishing rightful ownership.


Here is a conclusion summarizing the key points of difference between share transfer and transmission:

In conclusion, share transfer and transmission encompass intricate procedures governing changes in ownership of listed company securities. Grasping the fundamental differences assumes significance to adhere to accurate protocols during such events.

Share transfer refers to the voluntary decision of existing shareholder to sell or gift securities held under his/her name to another living eligible person based on mutual agreement, necessitating submission of elaborate paperwork evidencing such sale or gift consideration exchange between parties. Share transmission however relates to automatic inheritance and vesting of shares to deceased shareholder’s legal heirs or nominees upon providing death proof and succession documents without requiring explicit consent or financial exchange. 

While transfer application involves the active participation of legal transferor and proposed transferee, transmission procedures warrant interactions between company registrar and verifying authority to establish credentials of successor applicants claiming rights to inherited shares. Further, timelines governing transfer registration ranges between 15-30 days while more extensive durations of 1-3 months apply for transmission, recognizing complexities in ascertaining legal heirship.

Finally, transfer of ownership requires payment of stamp duties, taxes, facilitation charges and premiums as applicable while securities transmission to rightful claimants remain devoid of major costs barring statutory levies.

Thus recognizing aspects around voluntary trading consent against involuntary inheritance claims, nature of documentation, parties involved, timeframes permitting processing and costs governing execution remains vital for investors to adhere to suitable protocols during share ownership alterations to avoid complications. Securing clarity on whether an imminent ownership change instance warrants transfer or transmission procedures based on the triggering situation ensures smooth sailing.

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