Section 72 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 72 allows every holder of securities of a company to nominate a person to whom those securities will vest if the holder dies. A valid nomination lets the company deal with the nominee directly, without waiting for a succession dispute to be settled.
Any holder of securities may, at any time, nominate a person in the prescribed manner. Joint holders nominate together, and the nomination takes effect only when all the joint holders have died. Once made, the nominee becomes entitled to all the rights in the securities, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner. If the nominee is a minor, the holder can name another person to take the securities if the minor dies.
What the section says
Section 72 has four sub-sections. Each does one job.
| Sub-section | What it provides |
|---|---|
| (1) | Every holder of securities may, at any time, nominate, in the prescribed manner, any person to whom the securities vest on the holder's death. |
| (2) | Joint holders may together nominate a person to whom all the rights vest on the death of all the joint holders. |
| (3) | Despite any other law or any disposition, testamentary or otherwise, the nominee becomes entitled to all the rights in the securities, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner. |
| (4) | Where the nominee is a minor, the holder may appoint, in the prescribed manner, a person to become entitled to the securities if the minor nominee dies during minority. |
The word "securities" is wider than "shares". It covers the instruments a company issues to investors, so debentures are within its reach as well as equity and preference shares.
Who can nominate
Every holder of securities can nominate. There is no minimum holding and no time limit. You can nominate on the day you subscribe or decades later. A nomination is personal to the holder: a company cannot nominate on its own behalf, and the section speaks of a person to whom the securities vest "in the event of his death".
For joint holders the rule is stricter. Under sub-section (2) they nominate together, and the nominee takes the rights only on the death of all of them. While any joint holder is alive, the surviving holder continues to hold the securities; the nomination has not yet operated.
Effect of a valid nomination
Sub-section (3) opens with a non-obstante clause: "notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise". So a valid nomination prevails over what a will says about the same securities. The nominee, on the holder's death, "shall ... become entitled to all the rights in the securities ... to the exclusion of all other persons".
This is why the nomination form matters as much as the will. A shareholder who writes a will leaving shares to a child, but has nominated a spouse in the company's records, has created a conflict that the section resolves in favour of the nominee as far as the company is concerned. Keep the two documents aligned. Whether a nominee must later account to other legal heirs is a question of the general law of succession, not of section 72, and the section does not answer it.
For a public or private company, the practical gain is speed. A company that holds a valid nomination can register the nominee without insisting on probate or succession proceedings. If you want to understand how vesting on death differs from an ordinary sale, see transfer and transmission of shares.
How a nomination is made, varied or cancelled
The Act says only "in the prescribed manner". The manner comes from the rules made under the Act, and the commonly used forms are SH-13 for nomination and SH-14 for cancellation or variation. Check the current rules and the company's own procedure before filing, because the section itself does not lay down the form or the witnessing requirements.
Two points follow from the text:
- A nomination stays in force unless varied or cancelled in the prescribed manner. A later will or a casual letter does not cancel it.
- Because the power is exercisable "at any time", a holder can change the nominee as often as circumstances change, such as marriage, divorce, a death in the family or a business restructuring.
If you are moving or dealing with holdings in a company, our share transfer service can help with the paperwork around the register of members and transmission.
Nomination of a minor
A holder may name a minor as nominee. Sub-section (4) then lets the holder appoint, in the prescribed manner, a person who will become entitled to the securities if the minor nominee dies during minority. Without this second appointment, the nomination would fail on the minor's early death, and the securities would fall back to ordinary succession.
Practical examples
Example 1: single holder. Meera holds 5,000 equity shares in a private company and nominates her brother. She dies. The company, on proof of death and the valid nomination, treats her brother as entitled to the shares, even though her will left everything to a cousin.
Example 2: joint holders. Ramesh and Sunil hold shares jointly and nominate Ramesh's daughter. Ramesh dies first. The nomination does not yet operate, and Sunil continues as holder. When Sunil also dies, the daughter becomes entitled.
Common mistakes
- Assuming a will replaces a nomination. Under sub-section (3) it does not.
- Nominating one person in the demat account and a different person in physical folios, then forgetting one of them.
- Leaving a minor nominee without a sub-section (4) appointment.
- Not updating the nomination after a family change.
Need help with nomination and transmission of shares?
If a shareholder has died, or you want a clean nomination trail across your holdings, our team can guide the documentation and company-side steps. Start with our share transfer support and we will map what your case needs.
Key takeaways
- Every holder of securities may nominate a person at any time, in the prescribed manner.
- Joint holders nominate together, and the nominee takes rights only after all joint holders have died.
- A valid nomination prevails over a will and any other disposition as regards the company.
- It stays in force until varied or cancelled in the prescribed manner.
- For a minor nominee, the holder can appoint a person to take over if the minor dies during minority.
- Section 72 itself carries no penalty clause.
Read next
- Transfer and Transmission of Shares: Key Differences and Process
- Demat Accounts of Shareholders: Joint Holders, Minors and Nomination
- Section 151 of the Companies Act, 2013: Small shareholders' director
- Section 160 of the Companies Act, 2013: Candidate for directorship and deposit
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.