Nominee in share doesn’t grant inheritance rights – Supreme Court

In a recent judgement delivered on 14th Dec, the Supreme Court has ruled that ownership of financial instruments like shares and debenture certificates should pass to the successor through legal or testamentary means, rather than to the nominee.

The Court said being a nominee in a share/debenture certificate doesn’t automatically grant inheritance rights. The ownership of these instruments is decided by the deceased’s will or succession laws in India, which may include the Hindu Succession Act or the Indian Succession Act

The decision arose from a family dispute where a father, through his will, bequeathed shares and debentures to one son, leading to a disagreement with the other son who was listed as the nominee.

The court stressed that nominees play a role in transferring assets but do not become successors under the Companies Act of 1956 and 2013.

*The ruling clarified that a nominee holds the asset in a fiduciary capacity for the benefit of legal heirs as determined by the will or relevant succession laws, emphasizing that nominees are temporary custodians without absolute title to the asset.*

Nominee in share doesn’t grant inheritance rights – Supreme Court