When an Investor Dies, Who Gets the Shares? Nominee vs Legal Heir

What it is

When a shareholder dies, the shares do not move on their own. The company, registrar or depository has to be told, and has to be satisfied about who is entitled to them. This step is called transmission. SEBI defines it as the transfer of securities after the death of a sole holder or of all joint holders.

Think of it like a house key. A death certificate tells the bank the owner is gone. It does not tell the bank who may walk in.

The key distinction: nominee or legal heir

Many people assume the nominee becomes the owner. SEBI's circular of 23 July 2026 says otherwise: where there is a nomination, the nominee receives the assets "as trustee on behalf of legal heir(s)" of the deceased.

So a nomination makes the claim simple. It does not change who ultimately owns the shares. The legal heirs do.

Where there is no nomination, the securities go to the claimant or legal heirs, and the paperwork depends on how much is at stake.

How it works, by value

For holdings with no nomination, the circular sets tiers. For demat shares the limits are:

• Up to ₹30,000: Quick Transmission Processing. A request form-cum-undertaking on plain paper, plus proof of relationship. Only parents, spouse, children and parents-in-law can use this route.
• Up to ₹30 lakh per beneficial owner: simplified documentation. A notarised indemnity bond, plus an affidavit-cum-NOC from all legal heirs or a notarised family settlement deed.
• Above that: an affidavit-cum-NOC from all legal heirs, plus one of a Will (with an indemnity bond), a Legal Heirship Certificate, or a court-issued Succession Certificate, Letter of Administration or Court Decree.

Value is worked out from the previous closing price on a recognised exchange. Physical shares have lower limits: ₹10,000 and ₹10 lakh.

Two other changes: probate of a Will is no longer a mandatory requirement, and entities should ordinarily finish within 21 calendar days of receiving all documents. The framework came into force 30 days after the 23 July 2026 circular.

A real example: Star Health (2022–2026)

Large holdings can still take years. In its notice for the 21st AGM, Star Health & Allied Insurance says Rakesh Jhunjhunwala held 8,28,82,958 equity shares when he died on 14 August 2022.

The notice lists the steps that followed: probate granted by the Bombay High Court on 18 December 2023, IRDAI approval dated 6 April 2026, and completion of the transmission on 25 June 2026. That is nearly four years after his death.

This is the far end of the scale, and a single case. Most claims are far smaller. But it shows the point of the tiers: the bigger the claim, the more proof the system asks for before it hands shares over.