What Is Transmission of Securities? SEBI Rules

Transmission of securities is what happens to shares when the holder dies. Nothing is sold and nobody signs a transfer deed. The securities pass by operation of law to a nominee, to a surviving joint holder or to legal heirs, and the registrar's job is to record that change against evidence. This page sets out what transmission of securities is in SEBI's framework, how it differs from a transfer, what a nominee legally is, and the timelines the intermediaries work to.

How is transmission of securities different from a transfer?

Transmission of securities and a transfer are separate events, and the difference is who acts. A transfer is something the holder does. A sale, a gift or an off-market move is executed on the holder's instruction, by an instrument of transfer for physical securities or a delivery instruction slip for demat securities.

Transmission is something that happens to the holder's securities. There is no instruction from the deceased, so the registrar has to establish two things instead: that the holder has died, and that the claimant is entitled. That is why the paperwork is heavier at exactly one point in SEBI's rules on service requests. Paragraph 20.7 of the RTA master circular says indemnity shall not be required for any service request except transmission and a request for issuance of duplicate security certificates.

Two consequences follow. Transmission is not a taxable transfer: clause (iii) of section 47 of the Income Tax Act, 1961 exempts it, which is the basis on which SEBI standardised a reporting code for it. And transmission does not need a price, a consideration or a counterparty.

What is a nominee in a demat account, legally?

Not an owner. SEBI's own words in paragraph 22.1 of the RTA master circular: the nominee acts as a Trustee of the securities of the original security holder and transfers the securities to the legal heir as per succession plan.

That two step shape, holder to nominee to legal heir, created a tax problem that SEBI fixed in September 2025. When a nominee passed securities on to the legal heir, the second leg was being reported in a way that could get the nominee assessed for capital gains, even though section 47(iii) exempts it. Following work with the Central Board of Direct Taxes, SEBI directed reporting entities to use a standard reason code, "TLH" for Transmission to Legal Heirs, when reporting such a transaction to the CBDT, so the exemption is applied correctly.

An investor may provide up to three nominees from 1 September 2026, down from the up to 10 that the superseded circular dated 10 January 2025 allowed at paragraph 3.2. Where there are several nominees, on the investor's demise they may either continue in the same account or folio or open separate ones for their respective holdings. The count comes from SEBI circular SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2026/12676 dated 29 May 2026, which is the governing instrument: paragraph 15 supersedes every earlier nomination circular with effect from 29 May 2026, and paragraph 13 brings the circular itself into force on 1 September 2026. Anyone holding more than three registered nominations today should expect the cap to change under them.

That two-date structure matters for one detail readers will find stated differently elsewhere. The RTA and depository master circulars describe fortnightly email and SMS nudges to holders without a nomination, but they rest on circulars the 29 May 2026 circular has already superseded. Paragraph 10.2(a) of the new circular sets bi-annual messages instead, in force from 1 September 2026, alongside a pop-up on the benefits of nomination on the first login of the day. Neither messages nor pop-ups go to investors who have already nominated.

What happens when securities are jointly held?

The claim route is different, and simpler. For transmission to surviving joint holders, RTAs must comply with clause 23 of Table F in Schedule 1 read with sections 56(2) and 56(4)(c) of the Companies Act, 2013, and transmit the securities in favour of the surviving joint holders, provided nothing in the company's articles of association says otherwise.

On the depository side, a joint demat account can be operated either "jointly" or by "anyone of the holders or survivor(s)", and that arrangement does not expire on the death of one holder if the survivors choose to continue the same account by deleting the deceased's name. The depository must retain an audit trail of that deletion. A depository participant's liability is discharged only if it verified the identity of the survivors and the fact of death through documentary evidence, satisfied itself that no court order restrains the transmission, and made clear to the survivors that they receive the deceased's securities as trustee for the legal heirs.

What are the timelines?

A second, newer deadline applies to physical holdings. Where the deceased held securities in a single name and in physical mode, the RTA or issuer company must, after verifying and processing the documents, transmit the securities directly into the claimant's demat account and intimate the claimant within 30 days of receiving the request. That direct-to-demat route comes from SEBI circular HO/38/13/(3)2026-MIRSD-POD/I/3763/2026 dated 30 January 2026, and it removes the old step of issuing a fresh physical certificate to the claimant.

One procedural protection applies across all service requests including transmission: the RTA shall raise all objections in one instance only, and may seek additional information only where there is a genuine deficiency in what was furnished.

What a claimant actually has to produce

That depends on whether there was a nomination, whether the holding was single or joint, and how much it is worth. The document sets are prescribed scenario by scenario, and the small-value route uses an indemnity bond and a no objection certificate instead of a succession certificate. Those checklists are set out in how to transmit shares of a deceased holder.

Before any of it, a claimant needs to know which registrar holds the folio and whether the account is KYC-complete, which is a separate lookup covered in how to check RTA and folio details.

So transmission of securities is a records exercise with a succession law question underneath it. Get the nomination on file while it costs nothing, and know that the nominee who receives the shares holds them for the legal heirs rather than owning them outright.

Flock reports the filings themselves, each one dated and linked to its source. What any disclosure means for your money is your call to make. Not investment advice.