NISM-Series-VI: Depository Operations · Investor Services (NISM VI)

Transfer, Transmission and Nomination of Securities in a Demat Account

Updated 11 October 2026 · Fact-checked

Transfer moves securities from one living holder to another, on-market through a settlement or off-market using a delivery instruction slip. Transmission passes securities to legal heirs or nominees when a holder dies. Nomination lets a holder name who receives the securities after death. Questions test which route applies and what the DP does.

Understand Transfer, Transmission and Nomination

A demat account holds securities in electronic form. Securities can leave your account in three different situations. Keep them apart and most questions become easy.

Transfer is a voluntary movement by a living holder. It can be on-market, where securities move through a stock exchange trade and clearing corporation settlement. It can be off-market, where you give your DP a Delivery Instruction Slip (DIS) or an electronic instruction and the securities move directly to another BO account without an exchange trade. Off-market transfers are used for gifts, family transfers, or deals agreed privately.

Transmission is not voluntary. It is the passing of securities by operation of law on the death of a holder. On death, the securities pass to the surviving joint holders, or to the nominee or legal heirs. Nominee rights arise only on the death of the sole holder or of all the joint holders. The DP needs a request from the claimant, with proof of death and identity documents. The DP verifies and processes it. The claimant must have a demat account to receive the securities, or open one.

Legal incapacity is a separate matter and is not transmission. If a holder becomes legally incapable, the account is dealt with through legal representatives or a court-appointed guardian, not through a nominee.

Nomination is a facility to name a person who gets the securities if the holder dies. On the death of the sole holder or of all the joint holders, the nominee is entitled to the securities. The nominee can claim them through the DP without a succession certificate. This makes transmission simpler than a claim by legal heirs who are not nominees.

For the exam, remember the order of thinking: who is moving the securities, is the holder alive, and which document supports the movement.

Key formulas to remember

Transfer vs transmission: Transfer = voluntary, holder alive. Transmission = by operation of law, on the death of a holder.; Most direct questions test this single difference. Legal incapacity is handled separately and is not transmission.
Off-market transfer instrument: Off-market transfer → DIS (or electronic instruction) signed as per the account's mode of operation, normally by all joint holders unless a different authorised mode applies; The DP acts only on a valid, properly signed instruction.
On-market transfer: On-market transfer → exchange trade settled through clearing corporation; The seller's securities move from the seller's BO account to the selling clearing member's pool account, and then to the clearing corporation at pay-in. At pay-out they move to the buying clearing member's pool account, and then to the buyer's BO account.
Transmission to joint holders: Death of one joint holder → surviving holder(s) continue as the BO(s); The name of the deceased is removed after the DP verifies the death proof.
Nomination effect: On the death of the sole holder or all joint holders, the nominee is entitled to the securities and can claim them through the DP; The nominee's claim does not need a succession certificate.

How to solve Transfer, Transmission and Nomination questions

Use this method for any question on transfer, transmission or nomination.

1Read the scenario and decide whether the holder is alive or dead.
2If alive, decide whether the movement is through an exchange trade (on-market) or direct between accounts (off-market).
3If off-market, think of the DIS or electronic instruction, signatures of all holders, and DP verification.
4If the holder is dead, identify the claimant: surviving joint holder, nominee or legal heir.
5Check whether a nomination exists, since this decides the documents and ease of the claim.
6Match the options to your answer and remove those that mix up the terms transfer and transmission.
7Pick the option that states the rule exactly and reject absolute words you cannot support.

Quickest way: Alive or dead, trade or no trade

When to use it: Use this when you have under a minute for a definition or scenario question.

Alive and exchange trade: on-market transfer.
Alive and no exchange trade: off-market transfer using a DIS.
Dead holder: transmission.
Wants to name a successor in advance: nomination.
Eliminate any option that calls a death-related movement a transfer.

Common mistakes in Transfer, Transmission and Nomination

Calling a movement on death a transfer.
Both words describe securities moving between accounts.
Fix: Tie transmission to the death of a holder and operation of law. Transfer is always the holder's own act.
Thinking a nominee must prove succession through a court order or succession certificate.
Students mix up the nominee with legal heirs who are not nominees.
Fix: On the death of the sole holder or all joint holders, the nominee is entitled to the securities and claims them through the DP without a succession certificate.
Assuming off-market transfers go through the exchange.
Students link all securities movement to settlement.
Fix: Off-market transfers are direct between BO accounts on a valid instruction and do not involve an exchange trade.
Forgetting that all joint holders must sign a DIS where the account requires it.
Students think one signature is enough in every case.
Fix: Check the mode of operation of the account. Without a different authorised mode, the instruction must meet the account's signing rules.
Ignoring that the claimant needs a demat account.
Students focus only on the documents.
Fix: Remember the securities are credited to a BO account of the claimant, so one must exist or be opened.

Worked examples

Example 1

A BO wants to gift 500 shares to his daughter, who has her own demat account, without any exchange trade. Which route applies, and what does the BO give his DP?

Show the solution

The holder is alive, so this is not transmission.
There is no exchange trade, so it is not on-market.
The movement is voluntary and direct between BO accounts, so it is an off-market transfer.
The BO gives the DP a valid Delivery Instruction Slip (or electronic instruction) with the required signatures.

Answer: Off-market transfer, using a signed DIS or electronic instruction.

Example 2

A sole holder of a demat account dies. He had registered a nominee. Which statement is correct: (a) The securities are transferred to the nominee, (b) The securities are transmitted to the nominee on the claim being processed, (c) The exchange settles the securities to the nominee, (d) The securities lapse until a court order is issued?

Show the solution

The holder has died, so the movement is transmission, not transfer. Option (a) is wrong.
Exchange settlement applies only to trades, so option (c) is wrong.
Securities do not lapse. A nominee exists, and the nominee is entitled to the securities and can claim them through the DP without a succession certificate or court order. Option (d) is wrong.
The nominee submits the claim with proof of death and identity, and the DP processes the transmission.

Answer: Option (b): the securities are transmitted to the nominee on the claim being processed.

Exam tips

Watch the words transfer and transmission. Examiners place them in similar options to catch careless reading.
Expect scenario questions where you must pick on-market, off-market, or transmission from the facts.
With negative marking of 25% of the marks assigned to a question in this exam, skip an option you cannot justify rather than guess between two similar ones.
Remember that on the death of the sole holder or all joint holders, the nominee is entitled to the securities and claims them through the DP without a succession certificate.

Practice questions from Investor Services (NISM VI)

Transfer, Transmission and Nomination in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CA IntermediateShare Certificates, Transfer and Transmission

Transfer, Transmission and Nomination: frequently asked questions

What is the difference between transfer and transmission of shares?

Transfer is a voluntary movement of securities by a living holder, either on-market or off-market. Transmission is the passing of securities by operation of law on the death of a holder. The claimant is a joint holder, nominee or legal heir.

How do I transfer shares off-market using a delivery instruction slip?

You fill in the DIS with the ISIN, quantity and the receiving BO account details, sign it as per your account's mode of operation, and submit it to your DP. The DP checks it and processes the debit and credit. Electronic instructions can serve the same purpose where the facility is available.

What is the nomination facility in a demat account?

It lets a BO name a person to receive the securities if the BO dies. On the death of the sole holder or all joint holders, the nominee is entitled to the securities. The nominee can claim them directly from the DP with the required documents, without a succession certificate.

What happens to a demat account when one joint holder dies?

The surviving joint holders continue to hold the securities. The DP removes the deceased holder after verifying proof of death. The claim is handled as transmission.