Nominee, not heir, inherits shares
Shibu Thomas | TNN Mumbai TOI 21st April 2010 Mumbai: The nominee of a deceased person, and not the heir, has the right to shares after the original shareholder’s death, the Bombay high court has ruled. Dismissing the application of a widow who sought permission to sell shares belonging to her late husband, Justice Roshan Dalvi held that she had no right to do so since she was not the nominee. The nominee was her late husband’s nephew. “The Companies Act sets out that the nomination has to be made during the lifetime of the holder, according to legal procedures. If that procedure is followed, the nominee will become entitled to all the rights in the shares to the exclusion of all other persons (following the death of the shareholder),’’ said the judge. The court said that Harsha Kokate would have no rights over the shares owned by her deceased husband, Nitin Kokate. Harsha and Nitin wed in December 2004, and Nitin passed away in 2007. A year later, Harsha moved the high court seeking to sell the shares in Nitin’s demat account with Saraswat Cooperative Bank. It was found that a year before his death, Nitin had nominated his nephew in respect of the shares. Harsha’s lawyers argued that she was entitled to the shares as she was the heir and legal representative of her late husband. Her lawyers also pointed to the nomination provisions relating to insurance papers and to the shares of a flat in a cooperative housing society. * ‘Nomination includes share ownership rights’ * Mumbai: In a judgment dismissing the application of Harsha Kokate, a widow who sought permission to sell shares belonging to her late husband Nitin Kokate, Justice Roshan Dalvi of the Bombay High Court has ruled that the nominee, not the heir, has the right to shares after the original shareholder’s death. Harsha’s lawyer argued that under the provisions of the Insurance Act as well as the Maharashtra Cooperative Societies Act, nomination only makes the nominee a trustee for the insurances policy, or shares, of the flat. It was also argued that the nominee holds the policy/shares in trust for the estate of the deceased, but has no right over them. “Since Nitin died intestate (without leaving a will), his widow would be entitled to the shares to the exclusion of the nominee,’’ claimed Harsha’s advocate. However, the high court disagreed. “The provisions (relating to insurance and housing societies) are made merely to give a valid discharge to the insurance company or the cooperative society without vesting the ownership rights in the insurance policy or the membership rights in the society upon such nominee,’’ said the judge, pointing out that the provisions of the Companies Act and Depositories Act that govern equity shares are different. Both these laws say the shares would be vested with the nominee on the death of the shareholder. “Upon such nomination, therefore, all the rights incidental to ownership would follow. This would include the right to transfer the shares, pledge the shares or hold the shares,’’ said the judge. [email protected] -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
