SEBI Proposes Simpler Process for Heirs to Claim Shares of Deceased Investors

India’s capital markets regulator, Securities and Exchange Board of India (SEBI), has proposed a simplified process for the transmission of securities after the death of an investor. The initiative is aimed at reducing paperwork and making it easier for nominees and legal heirs to claim financial assets.

According to a consultation paper released by the regulator, the new framework seeks to streamline documentation requirements, revise monetary thresholds for simplified claims, and introduce a straight-through processing (STP) mechanism for small-value claims.

The regulator said the proposal is necessary given the significant expansion of India’s securities markets and rising asset values.

According to the consultation paper:

"The existing limits for simplified documentation were set in time and there is a dire need to review the current limits given the exponential growth of the securities market and increased asset prices," Securities and Exchange Board of India (SEBI) said, according to PTI.

The regulator further noted:

"To keep up with this and as a measure to ease restitution of assets to survivors of deceased investors, the limits for availing simplified documentation for transmission are proposed to be revised," it added.

Revised Documentation Rules for Transmission of Securities

Accepted Forms of Death Certificate

Under the proposed framework, SEBI has suggested expanding the acceptable forms of death verification documents.

Valid Proof of Death May Include

• Original death certificate

• A copy verified with the original by the nominee

• A copy attested by a notary public or gazetted officer

• A certificate carrying a QR code

These changes aim to make it easier for claimants to provide valid documentation and reduce delays in claim settlements.

Legal Heirship Certificate Guidelines

Authority Requirements

The regulator has also specified requirements for legal heirship certificates under the proposed system.

According to SEBI’s proposal, a legal heirship certificate must be issued by a revenue authority not below the rank of a Tehsildar. This measure ensures the authenticity of documents while maintaining accessibility for claimants.

Revised Monetary Thresholds for Simplified Claims

Reflecting Market Growth

To reflect the rapid growth of India’s securities market and rising asset values, SEBI has suggested revising the monetary thresholds that determine which claims qualify for simplified documentation.

Proposed Limits

• STP limit:

  • ₹10,000 for physical securities

  • ₹30,000 for demat securities

• Simplified documentation threshold:

  • ₹10 lakh for physical holdings

  • ₹30 lakh for demat holdings

The regulator also noted that listed entities may enhance the ₹10 lakh threshold for physical securities at their discretion.

The revised limits aim to make the claim process more practical and aligned with current market valuations.

Straight-Through Processing (STP) for Small Claims

Faster Settlement for Low-Value Securities

SEBI has proposed introducing a straight-through processing (STP) mechanism for very small claims where the cost of documentation could exceed the value of the securities.

Under the STP mechanism, claimants would only need to submit limited documentation, allowing intermediaries to process claims much faster.

Documents Required for STP Claims

• Transmission request form

• Latest client master list (CML)

• Verifiable death certificate

• Valid ID proof

• An undertaking from the claimant

This approach is expected to significantly reduce administrative delays for small-value claims.

Simplified Process When Nomination Exists

Easier Claims for Nominees

In cases where the deceased investor had registered a nominee, the claim process will be considerably simpler.

Nominees will need to submit:

• Transmission request form

• Latest client master list (CML) attested by the depository participant

• Verifiable death certificate

• Valid identification proof

According to SEBI, once intermediaries complete the settlement process, nominees can transfer the securities to legal heirs without attracting income tax.

Claims Without Nomination or Will

Additional Safeguards Required

In situations where an investor did not nominate anyone or leave a will, the process becomes more complex.

In such cases, intermediaries must verify that the securities are transferred to the rightful heirs.

To address this, SEBI has proposed a risk-based documentation framework, where requirements vary depending on the claim value.

Documentation Based on Claim Value

Three-Tier Documentation Structure

1. Low-Value Claims (Under STP Threshold)

Claimants must submit:

• Transmission request form

• Latest CML

• Verifiable death certificate

• Valid ID proof

• Undertaking

2. Simplified Claims (Above STP but Within Threshold)

Additional documents required include:

• Notarised indemnity bond

• No-objection certificate (NOC) from other legal heirs

• Family settlement deed

3. High-Value Claims (Above Threshold)

Stronger legal documentation will be required, including:

• Transmission request form

• Latest CML

• Death certificate

• ID proof

• Notarised affidavit from all legal heirs confirming ownership

Additionally, claimants must provide one of the following:

• Succession certificate

• Letter of administration

• Court decree

• Copy of the will with notarised indemnity bond

• Legal heirship certificate along with indemnity bond and NOCs from non-claimants

Standardised Claim Submission Process

Improved Transparency and Tracking

SEBI has also proposed standardising claim submission procedures across intermediaries and listed entities.

Proposed Measures

• Provide standard claim forms

• Offer both online and physical submission options

• Acknowledge receipt of claims

• Inform claimants promptly about missing documents

• Provide facilities for online tracking of claims

Timeline for Claim Processing

Faster Settlement

Under the proposed rules, transmission cases must be processed within 21 calendar days after receiving all required documents.

If there is any delay or rejection, the entity must inform the claimant and provide reasons for the decision.

Special Provisions for Overseas Death Cases

Additional Certification Options

For cases involving investors who pass away outside India, SEBI has suggested additional ways to certify proof-of-death documents.

Accepted certification authorities may include:

• Court magistrate or judge

• Notary public

• Indian embassy or consulate

• Apostille certification

Additionally, the regulator has proposed accepting certification by authorised officials of overseas branches of scheduled commercial banks in India or foreign banks.

Public Consultation Open Until April 2

SEBI has invited feedback from market participants, investors, and stakeholders on the proposed framework.

Public comments on the consultation paper can be submitted until April 2.

Conclusion

SEBI’s proposal to simplify the transmission process for securities represents an important step toward improving investor protection and making financial asset claims easier for families of deceased investors. By revising monetary thresholds, introducing straight-through processing for small claims, and standardising documentation requirements, the regulator aims to significantly reduce paperwork and speed up settlement timelines.

As India’s securities market continues to expand rapidly and more individuals invest in equities and mutual funds, these reforms could play a crucial role in ensuring smoother asset transfer to nominees and legal heirs. If implemented, the new framework could enhance transparency, reduce legal complications, and provide much-needed relief to families navigating financial claims during difficult times.