Transmission of Shares (Section 56)
Transmission of shares takes place when a registered shareholders dies or becomes lunatic or is adjudicated insolvent or if the shareholder, being a company, goes into liquidation i.e. which is known as a transfer of shares by operation of law.
Transmission of shares is the process by which the title over shares is passed on from one person to another by the operation of law. In such cases, there is no need for an instrument of transfer.
On the death or lunacy of the original shareholder, his shares vest in his legal representative and his estate remains liable for the unpaid amount.
No formal instrument of transfer is required since the owner is not capable of executing the same as transferor. Moreover, there is no consideration is involved and no stamp duty etc. is required for registration of transmission of shares.