SEBI Proposes Easier Transfer of Securities After Investor Death

The market regulators of India, the Securities and Exchange Board of India, have proposed new rules which will make it easier for legal heirs and nominees to claim securities after an investor’s death. This proposed change will aim at reducing the paperwork, updating old limits, and speeding up the process so that the families of investors can access their financial assets more quickly.

Making the Transfer Process Simpler

In a consultation paper that was released on Thursday, SEBI said the current limits for simplified documentation were set many years ago. And since then, the securities market has significantly grown, and asset prices have increased.

Because of this, SEBI has now suggested raising these limits so that more claims can be handled with fewer documents. The main goal behind this is to help families of deceased investors receive their assets much faster, all while reducing the workload for financial intermediaries.

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New System for Small Claims

Moreover, for small claims, SEBI has introduced a straight-through processing (STP). This system will allow the claims to be automatically processed in cases where the paperwork could cost more than the value of the securities.

The STP limit under this proposal would be ₹10,000 for physical securities and ₹30,000 for dematerialised (demat) securities.

In addition to this, SEBI has also suggested increasing the limit for simplified documentation to ₹10 lakh for physical securities and ₹30 lakh for demat holdings. Listed companies may also choose to increase the ₹10 lakh limit for physical shares.

Documents Needed When There Is a Nominee

If the investor had already named a nominee, the transfer process will remain relatively simple. The nominee will need to submit:

A transmission request form
The latest Client Master List (CML) of the demat account certified by the depository participant
A verifiable death certificate
Valid identity proof

A valid death certificate can be the original document, a copy verified with the original by the nominee, a notarised or gazetted officer–attested copy, or a certificate that contains a QR code.

If a legal heirship certificate is required, it must be issued by a revenue authority of at least the rank of Tehsildar. SEBI also said that once intermediaries settle the claim, nominees can transfer the securities to legal heirs without paying income tax.

When There Is No Nominee or Will

If the investor did not name a nominee and did not leave a will, the process becomes more complicated because intermediaries must make sure the securities go to the correct legal heirs.

To deal with such cases, SEBI has proposed a system where the documents required depend on the value of the claim.

For small claims handled through the STP system, claimants will only need to submit a transmission request form, the latest CML, a verifiable death certificate, valid identity proof, and an undertaking.

For claims above the STP limit but within the new simplified documentation limit, claimants will also need to submit additional documents such as a notarised indemnity bond and a no-objection certificate (NOC) from other legal heirs, or a family settlement deed.

For larger claims that exceed the new limits, stronger legal documents will be required. These may include a succession certificate, a letter of administration or court order, a copy of the will with a notarised indemnity bond, or a legal heirship certificate along with an indemnity bond and NOCs from other heirs.

Standard Process and Time Limit

SEBI has also proposed a standard process for submitting claims. Financial entities will have to provide standard forms and make them available both offline and online. They must acknowledge receiving claims and inform claimants if any documents are missing. They may also provide an online system to submit and track claims.

Under the proposal, transmission requests must be processed within 21 calendar days after all the required documents are received. If a claim is delayed or rejected, the claimant must be informed along with the reason.

Cases Where Death Occurs Outside India

For cases where an investor dies outside India, SEBI has suggested more ways to certify proof-of-death documents. Apart from certification by courts, judges, notaries, Indian embassies or consulates, or through apostille, certification by authorised officials of overseas branches of Indian scheduled commercial banks or foreign banks will also be accepted.

SEBI has invited public comments on the proposed rules until April 2.