The markets regulator has streamlined the process for transferring shares of deceased investors. The fast-track route for small-value claims, simplified documentation for higher thresholds and reduced paperwork will together help bring down the number of unclaimed securities, explains Anjana Therese Antony
l What is transmission of securities?
TRANSMISSION IS THE process through which securities held by a deceased investor are transferred to a nominee, legal heir or other eligible claimant. Unlike a regular transfer, no buying or selling is involved. Instead, the ownership changes hands due to an investor’s death. The process applies to a range of financial assets, including shares, bonds and other securities held either in physical form or via a demat account.
Often, families have been required to furnish several documents to establish their claim, and in certain cases obtain legal certifications before the securities could be transferred. The problem became more acute in recent years as retail participation in the stock market surged.
The Securities and Exchange Board of India’s (Sebi) latest reforms acknowledge that financial assets’ inheritance should not be a prolonged administrative exercise. By simplifying the process, it aims to ensure that investments are transferred to rightful beneficiaries with fewer hurdles and shorter timelines.
l What is the new Quick Transmission Processing category?
A KEY CHANGE is the introduction of Quick Transmission Processing or QTP, a fast-track mechanism for low-value claims. Under this, physical securities worth up to Rs 10,000 and demat securities worth up to Rs 30,000 can be transmitted through a simplified process.
The move addresses a long-standing mismatch between the value of an investment and the effort required to claim it. In many instances, heirs had to complete documentation that was disproportionate to the value of the securities involved. For smaller holdings, the process itself often became a deterrent.
The QTP mechanism seeks to change that by creating a lighter framework for low-value claims. Beyond convenience, the measure could also help reduce the number of small-value investments that remain unclaimed because families either abandon the process midway or choose not to initiate it at all.
l Thresholds raised for simplified documentation
SEBI HAS ALSO widened access to the simplified transmission framework. The threshold for physical holdings has been doubled to Rs 10 lakh per listed company from Rs 5 lakh earlier. For demat holdings, it has been doubled to Rs 30 lakh per beneficial owner.
The revision reflects how household participation in capital markets has changed over the years. Portfolio sizes that may have appeared substantial when the earlier limits were introduced are now increasingly common among retail investors. As a result, many families found themselves outside the simplified framework despite holding investments that were not particularly large.
By raising the thresholds, Sebi has brought a larger section of investors within the ambit of easier documentation norms. This could reduce processing delays and administrative costs while ensuring that legitimate claims are settled more efficiently.
l Probate no longer needed
THE REMOVAL OF the mandatory probate requirement could prove to be the most consequential among all the changes announced by the regulator.
A probate is a court-issued document that certifies the authenticity of a will. While it serves an important legal purpose, obtaining one can be a lengthy and expensive exercise. Families may have to engage lawyers, approach courts, and wait months before receiving the necessary certification. For many heirs, the requirement effectively became the biggest bottleneck in the transmission process.
Sebi has now removed the mandatory submission of probate under the simplified framework. The reform will be particularly beneficial for middle-class investors, whose families often faced disproportionate costs relative to the size of the inherited investment. Sebi has also done away with the need to submit PAN in eligible cases.
l Impact on investors & the market
THE IMMEDIATE BENEFICIARIES of the reforms are legal heirs and nominees, who can expect faster access to inherited securities and lower compliance costs.For investors, the changes provide greater confidence that their financial assets can be transferred smoothly to intended beneficiaries. The reforms also reinforce the importance of maintaining updated nominations, which remains the most effective way to ensure a seamless transition of assets.
From a broader market perspective, the measures could help reduce the stock of unclaimed securities. Investments often remain dormant for years because heirs are unable or unwilling to complete a complex transmission process.
At a time when regulators are increasingly focused on investor protection, the reforms serve as a reminder that safeguarding investors is not limited to market conduct and disclosures. It also involves ensuring that wealth accumulated in the market can move efficiently across generations.
