With a view to enabling the shareholders to appoint nominees for their shareholdings, the Companies (Amendment) Act, 1999 has made provision under which a shareholder, debenture holder or a deposit holder can now nominate a person in whom the share or debenture or deposit would vest with, in the event of former's death. Pursuant to this provision, the Development of Company Affairs has by Notification No.1/15/98 CL-V dated 12th January, 1999 as further amended by GSR 836(E) dated 24th October, 2000 prescribed Form 2B for making nomination in respect of shares, debentures and deposits, pursuant to Rules 4CCC and 5D of the Companies (Central Government) General Rules and Forms, 1956.
You can make nomination by filling in and sending it to the registrar, TATA Share Registry Limited, Form 2B signed if you are a sole holder or jointly if you are joint holders. We shall, after verifying your signatures, register your nomination and shall inform you about the registration of your nomination.
The nomination can be made only by consumers holding shares singly or jointly up to two persons. If the shares are held jointly, all the joint holders will have to sign the nomination form. Non-consumers including a society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family and holder of Power of Attorney cannot nominate.
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.
Notwithstanding anything contained in any other law or any testamentary deposition or otherwise, in respect of the shares or debentures, where a nomination has been made in accordance with the Companies Act, 1956, the nominee on the death of the share/debenture /deposit holder of the Company as the case may be on the death of all the joint holders, shall become entitled to the rights in the shares or debentures or deposits of the Company, as the case may be, in relation to such shares or debentures of the Company, to the exclusion of all other persons unless the nomination is revoked.
Only one nomination is allowed to be made per folio. However if the share/debenture/deposit
holders hold more than one folio; but in different order of names or hold in joint
names in more than one folio in different combination of names, then they can appoint
different nominees under each folio.
For example, if shareholder "A" and "B" jointly hold 100 shares, they can together appoint one nominee. However, if 50 shares are held jointly in the names of A and B respectively and further 50 shares in the name of B and A respectively, they can appoint two different nominees for their holdings of 50 shares each. Parents desirous of nominating their children can plan their holdings in such a manner so as to facilitate nomination of their children.
A shareholder can change the nomination as and when he so desires. However, the rules do not prescribe any specific manner in which the variation or cancellation of the nomination can be made. In the absence of clear guidelines or rules, shareholder can change the nomination by a letter revoking his old nomination and submitting Form 2B for change in nomination.
The prescribed Form 2B only provides for the name and address of the nominee. Section 109B(1) provides that the Board may require the nominee to provide and produce such evidence to prove his identify as thought necessary in the opinion of the Board. Without prejudice to the above, the share/debenture/deposit holder may also provide the specimen signature of the nominee along with From 2B which will facilitate speedy & convenient completion of transmission formalities.
Yes.Shareholders holding shares jointly up to two persons may together nominate a person to whom the shares shall vest in the event of death of all joint holders.
In the event of death of one of the joint holders, the shares get transmitted in the name of the surviving holder. The death of one of the joint holders does not rescind the nomination. Nominee will have title to the shares/debentures/deposits only on the death of all the joint holders.
Under the laws of wills and testamentary dispositions, joint wills cannot be revoked
after the demise of one of the joint testators. Extending the principle in this
case would suggest that nominations made jointly can not be revoked after the demise
of one of the joint holders.
However, under Section 109A, the nomination made is to take effect notwithstanding testamentary dispositions or otherwise.
Therefore, on demise of one of the joint holders the remaining joint holder would become the sole member. In such case, fresh nomination can be made in the prescribed manner revoking the old nomination.
Nomination can be made on partly paid-up shares/debentures. However, if at the time of demise of the share/debenture holder there are any calls in arrears, then the nominee would be subjected to the same rights and liabilities as the original share/debenture holder and the Board by virtue of Section 109B(2) will have discretion to register the shares/debentures in favour of the nominee.
Yes. Nomination can be made in favour of minor. In such a case, the name and address of the guardian shall be given by the holder in Form 2B as the name and address of the nominee. However, it should be clearly indicated that the person whose name & address appears as the nominee is a guardian & the name & address of the minor who he represents should also be specified in Form 2B and the guardian shall sign the nomination form on behalf of the minor.
Sub-Section (4) of Section 109A provides that it shall be lawful for the holder of the shares to nominate in the prescribed manner any person to become entitled to shares of the company in the event of his death during the minority of the nominee. A perusal of the prescribed Form 2B reveals that in case of a minor nominee, a person shall be named as guardian to whom the shares shall vest in the event of death of the shareholder during minority of nominee.
Upon transfer of shares or debentures or repayment/renewal of deposits, nomination in respect of such shares/debentures/deposits stands rescinded.
A shareholder is required to fill in the distinctive numbers of shares on Form 2B, only in the shares covered by these distinctive numbers shall be transmitted to the nominee in the event of death of the shareholder. For any further acquisition of shares of the Company, the shareholders will have to extend the nomination to the additional shares by filling in the necessary Form 2B as the existing nomination does not automatically cover the additional shares. To ensure that the nomination is valid, the shareholders need to make specific mention of all distinctive numbers.
A Non-Resident Indian can be a nominee on repatriable basis. If the member was a non-resident and had invested in the shares on repatriation basis, the non-resident nominee can elect to register himself as the holder of the share on the death of the member. If the member was a resident Indian, the concerned nominee has to take Reserve Bank's permission for registering the nominee as a member, to hold the shares on repatriable basis.
The nomination should be for the full holdings and not part.
The Act provides that the nomination overrides a Will or any other testamentary law/instrument.
A nominee is entitled to transfer the inherited shares in the same manner as the deceased shareholder could have made without having to transmit the shares in his name.
( i ) Upon death of the shareholder or of both the joint holders as the case may
be, the nominee would be required to furnish the following documents in addition
to any other documents as required by the Company for the purposes of identification:
(a) Certified true copy of death certificate of shareholder,
(b) Proof of date of birth of the nominee, in case the nominee is a minor,
(c) An affidavit/declaration by the nominee declaring his rights
(d) The original share certificate(s).
The Company, on production of the above documents and any further documents, if required, and on being satisfied about the identity of the nominee, will request the nominee elect either to register himself as holder of shares or to transfer the shares. The nominee is then required to issue a notice of election. There may be further identification requirements at the discretion of the Board of Directors.
( ii ) If the nominee elects to be registered as a holder of shares, he shall send a notice in writing stating that he so elects
Yes. However, if the Board has issued a notice to the nominee to elect and no election either to transfer or hold the shares/debentures in his name is made within a period of 90 days, the Board may withhold the payments of the dividends, bonus or other moneys payable/accruing to the share/debenture/deposit holders.
A nominee is not entitled to exercise any voting rights before being registered as a member.
In case of shares held in electronic form, names of the Depositories concerned (NSDL or CDSL) are entered in the Register of Members. The nomination made by the shareholders in respect of electronic holdings is distinct from their nomination for the physical holdings. Hence the Company will not recognise the nomination made by deemed members for their holdings in demat form. Such shareholders are given an option of nomination at the time of opening a demat account. However, the deemed members who have part of their holdings in physical form are entitled to make nomination in prescribed Form 2B for their physical holdings.
The Power of Attorney holder is not allowed to sign the nomination form on behalf of the shareholder.
On death of the shareholder, the nominee has to elect either to register himself
as a shareholder or to transfer the shares. If he elects to register himself as
a shareholder, he has to intimate his decision in writing to the Company. This will
be in the form of a transmission and therefore will not attract stamp duty.
If a shareholder elects to transfer the shares, he has to send a notice in writing to the Company. Since this amounts to transfer of shares like any other transfer, the same would attract stamp duty.
The shareholders and nominees concerned should preserve a copy of nomination form on their record. The Company would after registering the nomination would advise the shareholders in writing of the registration of nomination.
The Companies Act, 1956 has now recognised nomination. The Company will be fully
protected if it acts on the nomination. It is also necessary for the Company to
act on the nomination. The instruction given in the prescribed nomination form states
that transfer of shares/debentures in favour of the nominee and repayment of the
amount of deposits to the nominee shall be a valid discharge by the Company against
the legal heir.
Once a nomination is made, the same will qua the Company, override all claims from the legal heirs under the succession certificate or from beneficiaries/executors under a Will executed by the deceased shareholder.
If the nominee dies before the deposit holder, the Company should repay the deposit to the depositor on the date of maturity. If on the date of maturity, the depositor has also died, the heirs or legal representatives or holder of the succession certificate of the deposit holder is entitled to get refund of deposit and the interest due thereon. The heirs of the nominee are not entitled to claim the deposit amount if the nominee has predeceased the deposit holder. Similarly, if the nominee dies before the shareholder/debenture holder, the Company shall transmit the shares/debentures in the name of the heirs or legal representatives or holders of the succession certificate. The heirs of the nominee are not entitled to the shares/debentures if the nominee has predeceased the shareholder/debenture holder.