How to Transfer Shares After a Shareholder's Death in Nigeria

Shares do not pass to the family automatically when a shareholder dies. They pass by transmission: the company's registrar records the people appointed by the court as entitled to the shares, and those people then have the shares registered to the beneficiaries. It differs from an ordinary transfer because the registered holder cannot sign anything; the court grant takes the place of the holder's signature.

Transfer and Transmission: The Difference

• Transfer: a living holder moves shares to someone else, as a sale through a broker or as a gift using a share transfer form. The holder signs, and the holder's signature is the authority.
• Transmission: title passes by operation of law because the holder has died. Nobody signs on the holder's behalf. The registrar acts on the grant of probate or letters of administration.
• What follows transmission: once the personal representatives are recognised, they can ask for the shares to be registered in the beneficiaries' names, or take them into an estate account and deal with them from there.

The practical consequence is that a share transfer form signed by a relative is not enough. Registrars will return it and ask for the grant.

With a Will

The executors named in the will apply for a grant of probate. The grant confirms the will and the executors' authority. The registrar is concerned with the grant, not with interpreting the will: it records the executors, and the executors then direct where the shares go in line with the will. If the will leaves specific shares to a named person, the executors request registration in that person's name. If it leaves a share of the whole estate, the executors decide with the beneficiaries whether units or cash are distributed.

Without a Will

Where there is no will, the people entitled to administer the estate apply for letters of administration. Who may apply, and who inherits, depends on the law that governs the estate, which a solicitor will establish. The registry commonly requires more than one administrator and may ask for sureties. From the registrar's point of view the letters do the same job as probate: they name the people it will recognise. Distribution among the family follows the applicable rules of intestacy, not the preferences of whoever holds the papers.

Joint Holders

Shares registered in joint names are treated differently. On the death of one joint holder, the company generally recognises the surviving holder or holders as the owners of the shares, without a grant for that holding. The registrar will ask for the death certificate and the survivor's identification, and then removes the deceased person's name from the register. The CSCS record is updated through the survivor's broker. If all the joint holders have died, the estate of the last to die goes through transmission in the usual way.

A holding in one person's sole name with a relative listed only as next of kin is not a joint holding. Check how the name reads on the statement or certificate.

The Registrar's Role, and the Broker's

The registrar keeps the legal register of members for the company. It verifies the grant, notes the death, records the personal representatives and approves the change of name on the holding. It also holds any dividends that went unpaid.

The broker and the CSCS handle the electronic side. Where the deceased person held shares in a CSCS account, the move from that account to the beneficiary's account is processed through the CSCS on the strength of the same grant, with a stockbroker submitting the request. The registrar and the CSCS records have to end up agreeing, so expect both to ask for the documents.

Certificates: Dematerialising Into the Beneficiary's Account

Older holdings are often still on paper. Trading on the NGX is electronic, and paper cannot be sold, so certificated shares are brought into the CSCS as part of the estate exercise. The beneficiary, or the estate, opens a broker account and obtains a CHN. The certificates, the grant and the registrar's transmission forms are lodged, the registrar verifies the certificates against its register, and the units are credited to the receiving CSCS account. The certificate is cancelled in the process.

Check the unit count with the registrar before relying on the certificate. Bonus issues and other corporate actions since it was printed may have changed the holding.

What Executors and Administrators Should Gather

• Several certified true copies of the grant, because each registrar and the broker will want one.
• The death certificate.
• Identification, photographs, signatures and contact details for every personal representative.
• The deceased person's CHN, CSCS statements, contract notes and broker details, if any.
• Original share certificates and dividend warrants or advices.
• A list of companies held, with the registrar of each.
• Evidence of any name variations the deceased person used, such as a marriage certificate or affidavit.
• The CHN, CSCS account number and broker of each beneficiary who is to receive shares.
• Bank details for the estate, for dividends paid during administration.

Several Companies Means Several Registrars

There is no single office that transmits every holding at once. Each listed company appoints its own registrar, and each registrar runs its own process with its own forms. An estate with shares in eight companies may deal with four or five registrars. Group the companies by registrar at the start, lodge one complete set of documents with each, and keep a simple log of what was sent, when, and what came back. Electronic holdings under a single CHN are simpler, because the CSCS side can be handled through one broker.

Frequently Asked Questions

Is transmission of shares the same as transfer of shares?

They reach the same end, a new name on the register, by different routes. A transfer rests on the signature of a living holder. Transmission rests on a court grant after the holder's death, and the registrar will not accept a transfer form in its place.

Can shares be transferred to the next of kin without going to court?

For a holding in the deceased person's sole name, registrars generally require probate or letters of administration, because next of kin is a contact detail and not a title to the shares. The exception is a true joint holding, where the surviving holder is recognised on proof of death.

Does the beneficiary need a CSCS account first?

In practice the beneficiary does, because shares are registered electronically and the registrar needs an account to credit. A beneficiary without one opens an account with a stockbroker, receives a CHN, and gives those details to the executors.

Can shares go to a child who is under eighteen?

A minor's shares are normally held through an account operated by a parent, guardian or trustee until the child comes of age. The will, the grant and the broker's account-opening rules determine how the account is styled, so raise it with the solicitor and the broker early.

Is there tax or stamp duty on transmission?

Charges connected with estates and share documents depend on current legislation and on the registry and registrar involved, and they change. Ask the solicitor handling the estate and the registrar for the present position before budgeting.

What if the beneficiary wants to sell after the shares arrive?

Once the units are in the beneficiary's own CSCS account they are ordinary holdings, and any sale is made through the beneficiary's broker. The step-by-step guide to selling a deceased person's shares on this site covers that stage.