NISM-Series-VI: Depository Operations · Functions of Depository Participant - Transmission and Nomination

Transmission of Securities in Demat Accounts: NISM Depository Operations

Updated 11 October 2026 · Fact-checked

Transmission is the passing of securities in a demat account to another person by operation of law, not by a voluntary act of the holder. It happens on death, insolvency or similar events. The claimant, such as a legal heir or surviving joint holder, applies to the DP with documents. Transfer is voluntary.

Understand Transmission of Securities in Demat Accounts

Start with one idea: securities can change hands in two ways. The holder can choose to give them away or sell them. Or the law moves them because something has happened to the holder. The first is transfer. The second is transmission.

Transmission is a change in ownership by operation of law. The holder does not decide it. Typical events are the death of a holder, the insolvency of a holder, or the winding up or dissolution of a corporate holder. The person who receives the securities is called the claimant. A claimant can be a surviving joint holder, a nominee, or a legal heir.

In a demat account, the claimant does not simply get a credit. The claimant approaches a Depository Participant (DP). The claimant submits a transmission request with supporting documents, such as proof of death where the holder has died. The DP checks the papers and forwards the request. The securities are then moved to the claimant's own demat account. The claimant must have a demat account to receive them.

In a joint account, the surviving holder or holders are the ones recognised on the death of a joint holder. Their names stay on the account. The deceased holder's name is removed. For a sole holder, the nominee or legal heir claims the holdings, depending on the documents provided.

Remember the contrast. Transfer needs a delivery instruction from the holder, and the holder acts willingly. Transmission needs a claim from the successor, and the trigger is an event. For the exam, always ask: did the holder choose this, or did an event cause it? That one question decides most MCQs here.

Key formulas to remember

Transmission: Transmission = change of ownership by operation of law (death, insolvency, winding up); The holder does not act. An event triggers it.
Transfer: Transfer = voluntary change of ownership by the holder through a delivery instruction; Used for sale, gift or off-market movement.
Who applies: Transmission request is made by the claimant (survivor, nominee or legal heir) through the DP; The deceased or insolvent holder cannot give the instruction.
Destination: Securities are credited to the claimant's own demat account; The claimant needs an account to receive the securities.
Joint account on death: Surviving joint holder(s) continue; deceased holder's name is removed; Securities are not distributed to legal heirs while a joint holder survives.

How to solve Transmission of Securities in Demat Accounts questions

Use this method for any MCQ on transmission, whether it is a definition, a comparison or a scenario.

1Read the scenario and find the trigger. Is it death, insolvency, winding up, or a voluntary act such as sale or gift?
2If the trigger is an event outside the holder's control, label it transmission. If the holder chose to move the securities, label it transfer.
3Identify who is acting. Transmission is started by the claimant. Transfer is started by the holder through a delivery instruction.
4Check the account type. If it is a joint account and a holder has died, the survivor continues. Legal heirs come in only when no joint holder survives.
5Identify the destination. The securities go to the claimant's demat account through the DP.
6Match the options to your answer. Remove any option that says the deceased holder must sign, or that treats transmission as a sale.
7If two options look close, pick the one that mentions operation of law or a claim with documents.

Quickest way: Event or choice test

When to use it: Use when you have under a minute and the options mix transfer and transmission.

Ask: did the holder choose it? If yes, it is transfer.
If an event like death or insolvency caused it, it is transmission.
Check who applies. Claimant means transmission. Holder with delivery instruction means transfer.
Eliminate options that need the deceased holder's signature.

Common mistakes in Transmission of Securities in Demat Accounts

Treating transmission as a type of transfer by the holder.
Both words describe securities moving, so they sound alike.
Fix: Link transmission with operation of law and transfer with voluntary action. Use the event or choice test.
Thinking legal heirs get the securities even when a joint holder survives.
Students remember the legal heir rule and apply it to every death case.
Fix: In a joint account, the surviving holder continues first. Look for the account type in the question.
Assuming the claimant needs no demat account.
Students think the securities stay in the old account forever.
Fix: Remember that securities are moved to the claimant's own demat account, so the claimant needs one.
Believing transmission is done by a delivery instruction slip signed by the deceased holder.
Students mix the routine transfer process with the claim process.
Fix: Transmission starts with the claimant's request and documents submitted to the DP, not the holder's instruction.
Limiting transmission only to death.
Death is the most common example in notes.
Fix: Also remember insolvency and winding up or dissolution of a corporate holder as events that cause transmission.

Worked examples

Example 1

Mr. Rao, the sole holder of a demat account, dies. His son wants the securities. Which describes the process?
A. Transfer, because the son is a family member
B. Transmission, because ownership passes by operation of law on death
C. Rematerialisation, because the holder has died
D. Pledge, because the securities become security for a claim

Show the solution

Find the trigger. The holder died. This is an event, not a choice.
An event that moves ownership by law is transmission.
Check who acts. The son is the claimant and applies through the DP with documents.
Check the other options. Transfer needs the holder's voluntary instruction. Rematerialisation converts electronic holdings to paper. Pledge creates a security interest. None fits.

Answer: B

Example 2

Which one of the following is an example of transfer and not transmission?
A. Securities passing to a surviving joint holder on death of the first holder
B. Securities passing to a legal heir after the holder's death
C. Securities passing to an official assignee on insolvency of the holder
D. A holder gifting shares to a friend by giving a delivery instruction

Show the solution

Test each option with the choice question: did the holder choose it?
Option A is caused by death. This is transmission.
Option B is caused by death. This is transmission.
Option C is caused by insolvency. This is transmission.
Option D is a voluntary gift by the holder using a delivery instruction. This is transfer.

Answer: D

Exam tips

Expect direct questions asking you to tell transfer from transmission. Use the event or choice test.
Watch scenario questions about joint accounts. The survivor continues before legal heirs are considered.
Remember that death, insolvency and winding up of a corporate holder are the usual transmission triggers.
In a close call, choose the option that says the claimant applies to the DP with documents.
Check the detailed document list and timelines in your NISM workbook, since the exam follows its wording.

Practice questions from Functions of Depository Participant - Transmission and Nomination

Transmission of Securities in Demat Accounts: frequently asked questions

What is transmission of securities in a demat account?

It is the passing of securities to another person by operation of law, for example on the death or insolvency of the holder. The holder does not choose it. The claimant applies to the DP to have the securities moved to their own demat account.

What is the difference between transfer and transmission?

Transfer is voluntary and starts with the holder's delivery instruction. Transmission is caused by an event such as death or insolvency and starts with the claimant's request. The reason for the move is the key difference.

Who can claim securities through transmission?

A surviving joint holder, a nominee or a legal heir can be a claimant, depending on the account and the documents. In a joint account, the survivor continues first. The exact order and papers are set out in your NISM workbook.

Does the claimant need a demat account?

Yes. The securities are credited to the claimant's own demat account. If the claimant has none, they must open one through a DP.