Transmission in an 'Either or Survivor' Joint Demat Account
Ravi and Suresh, brothers, hold 800 equity shares of a listed pharma company in a joint demat account with DP ABC. The account mode is 'Either or Survivor'. No nominee is registered. Both holders' KYC is current. Suresh dies on 3 June. On 20 June Ravi submits a transmission request with the original death certificate, his PAN, Aadhaar, cancelled cheque and a notarised affidavit. The DP operations officer says that because there is no nomination and the holding is above Rs 1 lakh, Ravi must produce a succession certificate or probate; until then the account is frozen. Ravi says he is the survivor and can operate the account. The account has no pledge or lien. Of the 800 shares, 200 are locked in until 31 December. Ravi wants to sell 300 shares immediately.
1. Was the DP right to demand a succession certificate and freeze the account? Explain the correct transmission route for an 'Either or Survivor' joint account.
Read the worked answer
No. The DP has confused a sole holding with a joint holding. In an 'Either or Survivor' account, the right of survivorship operates on the death of one holder. The survivor is entitled to the securities and can request transmission to have the deceased holder's name removed.
The DP should:
- verify the original death certificate and retain a copy;
- complete KYC of the surviving holder;
- check that the account is not pledged, frozen or subject to a lien;
- process the transmission request and issue an updated holding statement.
A succession certificate or probate is not required merely because the value exceeds Rs 1 lakh. Nomination is also not the route here: a nomination normally operates on the death of a sole holder, and it does not displace a surviving joint holder. Freezing the entire account was therefore not justified.
2. What should the DP do about the 200 locked-in shares and Ravi's request to sell 300 shares? Can he sell before the deceased holder's name is removed?
Read the worked answer
The DP should process the transmission first so that the account records match the surviving holder. The lock-in does not disappear on transmission: the 200 shares remain locked in the demat account until 31 December and cannot be sold during that period. Only the 600 free shares are available for sale.
Ravi may be able to operate the account even before the name is removed because the mode is 'Either or Survivor', but the DP should not rely on that to skip record updating. If a sale instruction covers locked-in shares, the DP must reject or partially reject it so that the locked shares are not transferred. Ravi's request to sell 300 shares can be accepted only from the free balance, after confirming that no other lien or freeze exists.