Shareholders Nomination - Procedure for Filing SH-13

Under Section 72 of the

Companies Act, 2013, holders of shares and debentures of a company can nominate a person to whom the shares and debentures would vest on the demise of the holder of shares or debentures. In this article, we look at shareholder nomination and the procedure for filing SH-13.

Section 72 of Companies Act, 2013

Power to nominate:

Every holder of securities of a company may, at any time, nominate, in the prescribed manner, any person to whom his securities shall vest in the event of his death.
Where the securities of a company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, any person to whom all the rights in the securities shall vest in the event of death of all the joint holders.
Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, in respect of the securities of a company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the securities of the company, the nominee shall, on the death of the holder of securities or, as the case may be, on the death of the joint holders, become entitled to all the rights in the securities, of the holder or, as the case may be, of all the joint holders, in relation to such securities, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.
Where the nominee is a minor, it shall be lawful for the holder of the securities, making the nomination to appoint, in the prescribed manner, any person to become entitled to the securities of the company, in the event of the death of the nominee during his minority.

Filing Form SH-13

Nomination is required to be in Form SH-13 of the Companies (Share Capital and Debentures) Rules, 2014. The nomination can only be by individual holder(s) on their own behalf and not by power of attorney holder. If the shares or debentures or deposits are held jointly, then all joint holders are required to execute the nomination form jointly. A nominee can only be an individual and not a company or LLP.

Transfer of Shares based on Nomination

The Companies Act provides that the nominee of the securities of the company shall on the death of the holder(s), become entitled to all the rights of the holder(s) in relation to the securities to the exclusion of all other persons. Thus, upon the passing away of a person, the nominee would become entitled to all the rights in the shares and be made beneficial owners. This would give the person the right to transfer the shares, pledge the shares or hold the shares. Hence, all other persons are excluded and only the nominee becomes entitled under the statutory provision to have all the rights in the shares none other can have it.

Know more about distribution of property after death or benefits of having a Will.

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Frequently Asked Questions

Common questions about Shareholder Nomination Process under Companies Act 2013.

Shareholder nomination is a process under Section 72 of the Companies Act, 2013, which allows shareholders to nominate a person to whom their shares or debentures will be transferred upon their demise. This ensures a smooth transition of ownership and safeguards the interests of the nominee.

Every holder of securities (shares or debentures) of a company, whether held individually or jointly, can nominate a person to whom their securities shall vest in the event of their death.

A shareholder nomination is made by filing Form SH-13 of the Companies (Share Capital and Debentures) Rules, 2014, which is prescribed under the Companies Act, 2013.

No, a shareholder can only nominate an individual person as their nominee. Nominating a company or LLP is not permitted.

Upon the death of the shareholder(s), the nominee becomes entitled to all the rights in the securities, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner.

Yes, a nomination can be canceled or varied by the shareholder(s) in the prescribed manner, which is also through Form SH-13.

If the nominee is a minor, the shareholder(s) can appoint another individual to become entitled to the securities until the minor attains majority.

Yes, if the securities are held jointly by more than one person, all joint holders must jointly nominate a person as their nominee.

No, a shareholder nomination can only be made by the individual holder(s) themselves and not by a power of attorney holder.

Shareholder nomination provides a legal and secure way for shareholders to ensure a smooth transition of their securities to their desired nominee, bypassing the complexities of inheritance laws and other legal disputes.