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  • Writer's picturePratham Dave


Updated: May 9, 2022


According to the note to the provisions of the Companies Act. 2011, "this provision relates to section 109A of the Companies Act, 1956 and aims to provide that every shareholder or debenture holder may appoint a nominee or a joint nominee who shall be the holder of the instrument in the case of the death of the holder or joint holder unless the nomination is diverse or cancelled."


The nominee must be a natural person, including a minor, whose securities will vest in the case of the death of the security holders. However, if the nominee is a minor, it is the obligation of the holder of securities to select such other person to become entitled to the securities in the event of the nominee's death while in his or her minority. Moreover, all other artificial persons created/dressed by the law or by a fiction, such as a body corporate, a company, a society, a trust, a Hindu Undivided Family, and so on, are ineligible to become nominees.


Upon the death of a securities holder, or, in the case of joint holders, the death of all securities holders within ninety days, the nominee must provide a written notice including the death certificate of securities holders asserting his election to be registered as a holder of securities or transfer the shares in the name of another person. If such notice is not provided on the company within ninety days of the securities holder's death, the company shall suspend the payment of all dividends, interests, bonuses, or other amounts of money in reference of such securities until the nominee delivers his notice.

All limitations, restrictions, and provisions relating to transfer and registration of transfer under the Act shall apply to such transfer as if the securities holder had not died.

Nominee rights include the right to have securities registered in his name upon the death of a securities holder, as well as the right to receive dividends and other advantages acquired prior to being registered as a securities holder. The corporation is obligated to transfer to the nominee all dividends and interest withheld owing to non-submission of notice upon receipt of the required notice by the nominee. However, in the case of shares, the nominee is not eligible to vote until his name is registered as a member of the firm.


This Provision is stated under the Companies Act, 2013 of Chapter – IV Share Capital and Debentures.

Section 72(1),

Every holder of a company's stocks may, at any time, nominate any person to whom his securities shall vest in the event of his death in the prescribed manner.

Section 72(2),

When more than one person holds a company's stocks jointly, the joint holders may jointly nominate, in the required manner, any person to whom all rights in the securities shall pass in the case of the death of all the joint holders.

Section 72(3),

Regardless of any other law currently in force or any disposition, whether testamentary or otherwise, in respect of a company's securities, 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.

Section 72(4),

Where the nominee is a minor, it is permissible for the holder of the securities making the nomination to nominate, in an authorized manner, any person to become eligible for the company's securities in the case of the nominee's death during his minority.