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

A demat account holder has opted out of nomination by submitting a declaration. Later, the holder dies, and three legal heirs claim the holdings. Which is the position for the DP when processing transmission?

With no nominee, the DP processes transmission through the legal heirs, asking for the death certificate and the prescribed proof of legal heirship, with an indemnity where applicable. It cannot simply hand securities to any claimant, liquidate them, or transfer them to the investor protection fund.

  1. AThe DP processes transmission on the basis of documents prescribed for legal heirs, such as the death certificate and legal heirship proof, with indemnity as required by the DP's policy for the value involvedCorrect
  2. BThe DP can transfer the holdings to the eldest claimant without any documentation
  3. CThe DP must sell the securities and hand over the cash to the claimant
  4. DThe securities are automatically transferred to the depository's investor protection fund

Explanation

Without a nominee, the DP deals with legal heirs and needs the death certificate and proof of legal heirship such as a will, probate, succession certificate or a settlement or indemnity document as applicable, depending on the value of holdings. The DP cannot give securities to one claimant without documents, sell them, or move them to the fund.

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