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2.9.14

FAQ - Nomination of securities held in physical form.

Frequently Asked Questions on
‘Nomination of securities’

Prepared by Victor J Uruvath
Blog Author

We know that securities can be held in physical format or dematerialized format. Some of FAQ's by investors holding securities in physical form (share certificate) regarding nominationare answered below. 

1. What do you mean by nomination for securities under company law?

Ans: Section 72 of the Companies Act 2013 deals with nomination for securities issued by companies. Nomination is a facility whereby the holder of security appoints any person to whom his securities shall vest in the event of his death. The person nominated by holders is called the ‘nominee’ and he/she is the person to whom all the rights in the securities shall vest in the event of death of sole holder/joint holders.

2. Who can nominate?

Ans: Nomination can be made at any time -

a.      by the sole holder of securities, in case securities are in the name of a single holder,
b.      by all joint holders, in case of securities are held in joint names.

Non-individuals including Society, Trust, Body Corporate, Partnership Firm, Karta or Hindu Undivided Family, Holders of Power of Attorney cannot nominate.

3. Who can become a nominee?

Ans: Only a natural individual can be nominated. A Trust, Society, Body Corporate, Partnership firm, Karta of Hindu Undivided Family and power of attorney holder cannot be appointed as nominee.

4. How to execute the nomination ?

Ans: Nomination form is a legal document and is valid only if it is properly executed by nominators. If the shares are held by sole holder, then he/she should sign the nomination form. If the shares are held jointly, all joint holders shall sign (as per the specimen registered with the Company) the nomination form.

5. What is the role of witness in nomination?

Ans: The witness should sign and certify that the holder (s) (nominators) has signed the form on that day, in their presence.

6. Mr. A and Mr.B are joint holders of shares of Cgb Ltd. They had nominated Mr. C by filing Form SH 13. One day, A died in an accident. Can Mr. C claim the shares as nominee?

Ans:  No. C cannot claim the shares. If the shares are held jointly, subsequent to the death of anyone of the holders, shares would be transferred in the name of the surviving shareholders. The shares would not be registered in favour of the nominee when any of the joint holders are alive. Nominee becomes entitled to the shares only on death of all joint holders.

7. Which is the prescribed format used for nomination?

Ans: Nomination should be made in Form SH. 13 as provided by the Companies Act 2013. Shareholders holding shares in dematerialized mode, nomination is required to be filled with the Depository Participants (DPs) in their prescribed form. (Please see the sample format is enclosed at the end of this document)

8. I want to appoint my brother and wife as nominees in my folio no. F13423. What is the procedure?.

Ans:  No. Only one person can be nominated to a given folio. You may appoint either your wife or your brother in that folio.

9. Can a minor be appointed as a nominee? Please advise.

Ans: Yes. The holder may nominate a minor, provided he should appoint a guardian to hold securities during the period of minority. In such cases, the name and address of the Guardian should be provided.

10. What is the company procedure for recording nomination?

Ans: On the receipt of the nomination form, a corresponding entry shall forthwith be made in the relevant register of securities holders, maintained under section 88 of the Companies Act 2013. The request for nomination should be recorded by the Company within a period of 2 months from the date of receipt of the duly filled and signed nomination form.

11. How can the nominee claim securities on death of holder(s)?

Ans: In the event of death of the holder of securities or in the event of death of all the joint holders, as the case may be, the person nominated as the nominee may upon the production of such evidence as may be required by the Board, elect, either-

(a) to register himself as holder of the securities ; or
(b) to transfer the securities, as the deceased holder could have done.

         Where the person being a nominee, elects to be registered as holder of the securities in the event of the death of holder (s), he/she should forward to the company, a notice in writing signed by him stating that he so elects and such notice shall be accompanied with the death certificate of the deceased share or debenture holder(s).

12. Will the nominee be entitled to dividends or other benefits? Please advise.

Ans: A nominee, becoming entitled to any securities by reason of the death of the holder shall be entitled to the same dividends or interests and other advantages to which he would have been entitled to if he were the registered holder of the securities except that he shall not, before being registered as a holder in respect of such securities, be entitled in respect of these securities to exercise any right conferred by the membership in relation to meetings of the company: Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the securities, and if the notice is not complied with within 90  days, the Board may thereafter withhold payment of all dividends or interests, bonuses or other moneys payable in respect of the securities, as the case may be, until the requirements of the notice have been complied with.
13. I once had nominated my wife for receiving my shares upon my death. Now I wish to appoint my elder son as nominee instead of my wife. Is that possible? Please advise.

Ans: Yes. It is possible. A nomination made earlier may be cancelled, or varied by nominating any other person in place of the present nominee, by the holder(s) of securities who has made the nomination, by giving a notice of such cancellation or variation, to the company in Form No. SH14. The cancellation or variation shall take effect from the date on which the notice of such variation or cancellation is received by the company.

14. I had appointed a nominee for my securities. Now, I am thinking of selling those shares by transfer form. What will happen to the earlier nomination?

Ans: Nomination made earlier on those securities in the folio gets cancelled on transfer from that folio/transposition in that folio/dematerialization of securities.



15. I bought these shares from Mr. X, my neighbor in 2011. He had nominated his son by filing prescribed form. My doubt is - can I appoint another person as nominee now ?

Ans: Yes. Nomination made earlier by a holder for shares held in his folio, prevails as long as those shares are in his name. Once those shares are transferred to another person, then the previous nomination on those shares gets automatically cancelled. Now, the new holder may nominate another person. You can appoint your own nominee for those shares, as they are held by you in your name.

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 Sample of Nomination form      
Form No. SH-13
Nomination Form

[Pursuant to section 72 of the Companies Act, 2013 and rule 19(1) of the Companies (Share Capital and Debentures) Rules 2014]

To,

(Name & Address of the company)

I/We …………………………………….. the holder(s) of the securities of …(Company Name & Address) ……., particulars of which are given hereunder wish to make nomination and do hereby nominate the following persons in whom shall vest, all the rights in respect of such securities in the event of my/our death.

(1) PARTICULARS OF THE SECURITIES (in respect of which nomination is being made)

Nature of securities
Folio No.
No. of securities
Certificate No
Distinctive Nos







(2) PARTICULARS OF NOMINEE/S —

(a) Name:

(b) Date of Birth:

(c) Father’s/Mother’s/Spouse’s name:

(d) Occupation:

(e) Nationality:

(f) Address:

(g) E-mail id:

(h) Relationship with the security holder:


(3) IN CASE NOMINEE IS A MINOR—

(a) Date of birth:

(b) Date of attaining majority

(c) Name & Address of guardian:


(4) HOLDERS OF THE SECURITY (for each holder)

Holder 1
Name

Address

Signature


Holder 2
Name

Address

Signature


(5) WITNESS
Name

Address

Signature


FOR OFFICE USE ONLY
Nomination Regn No.

Date:

Company/Share Registrar seal:

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