Transfer Of An Estate/forced Transfer Of Shares Listed In Stock Exchange Quoted Companies.

An estate transfer is where securities/stocks/shares (a unit of ownership in a company) is done when the holder is deceased/dead/decedent.  

When a person dies, their personal representative or executor (the person you name to carry out your wishes after your death) has a duty of ensuring all heirs receive their distribution of assets according to the will, where the holder of the securities died Testate (died 

 having left instructions about who should be given your properties, money, etc.). 

In testate succession, the following documents are filed:  

• Form P.A 78 (petition)  
• Form P & A 3 (affidavit)  
• The original will plus 2 photocopies of the will  
• Original death certificate.  

The transfer of the Estate of the deceased is regulated by the law of the country of domicile at the time of death. 

The succession of shares/securities of the deceased shareholder domiciled in Kenya is regulated by the law of succession Act Cap 160 and the Companies Act number 17 of 2015 and the appointment of a personal representative or administrator is also regulated by this Act. 

In case of Intestacy succession, the following documents are filed at the High court in order to transfer the shares of the deceased;  

1. A search on the property. 
2. A letter from the chief stating the surviving beneficiaries.  
3.  The death certificate (original) After obtaining the above stated documents, the applicant is to file four forms in the court:   

• To identify proposed administrators and at least three witnesses.   
• To list of the deceased person’s property including shares in a company. 
•  List of beneficiaries and dependents. 
•  P & A 80 - The main petition that is accompanied by the above stated forms. It contains the prayers, if one wants to be an executor or administrator.  

There are costs involved to file and gazette the succession petition. The petition printed in the gazette within three (3) months from the date of filling the matter and once printed, a copy of the gazette notice is purchased and attached to the application for a hearing date of the letters of administration. After the letters of administration (documents to confirm that the personal representatives have been administering the estate and empowers the personal representative to distribute any capital assets) are granted, confirmation of application for of grant is issued six months later.   

THE PROCESS OF TRANSMISSION OF SHARES 

In today's electronic world the transfer and registration of shares in Kenya is done by the Nairobi Stock Exchange (NSE) which has come up with systems, that have eased the transfer and registration of shares through the Central Depository and Settlement Corporation (CDSC) account rendering issuance of paper certificates useless.  

The NSE as an association of stockbrokers is charged with the important role and responsibility of developing the securities market, protecting investors’ rights and regulating trading activities. 

This process takes place the moment the account holder dies.  

Starting the succession process in order to distribute the deceased’s securities/shares depends on whether the shareholder died testate or intestate. 

In intestate succession, there are various things that should be considered. This includes whether there are beneficiaries and the value of the deceased’s estate.  

Where the Death certificate, probate and Letters of administration is from a foreign country, the case needs to be re-registered at the High court of Kenya and documents notarized overseas must be certified by the foreign embassy of Kenya in that country or get a local public notary in Kenya to certify.  

The executor(s) of the will, has the authority to make transfer(s) but before then, ascertainment of the Stock broker whom the deceased had registered with must be known and the number of shares held with their CDSC (Central Depository and Settlement Corporation) account. 

The following documents are required to process forced transfer of shares by the Registrars:

• Original and certified copies Death certificate. Should be certified by a Commissioner of Oaths/Advocate 
• Certified Letters of grant probate (letters of administration). Should be certified by the High court of Kenya. 
• Certified confirmation of grant. Should be certified by the High court of Kenya. 
• Certified copy of the last Will if any. 
• If the share certificate is lost, contact the shares registrar and you will be provided with the letter of indemnity. 
• A sworn affidavit stating that the names of the deceased in the share certificate, death certificate and letters of administration belong to one person. 
• A sworn affidavit stating that the names of the Executors/administrators belong to one person in the letters of administration and their ID or passport copies in case they differ. 
• Certified copies of National ID or notarized copy for the beneficiaries/executors. 
• Original share certificates of the subject companies. 
• Indemnity for the lost share to be obtained the Registrar and the signature of the Executor is to be witnessed by an advocate. 
• Certified copy of the Death certificate of the deceased shareholder
• Certified copy of Identification card or surrender form of the deceased shareholder. 
• Certified copy of Certificate of confirmation of Grant from the High Court.  
• Certified copy of the Identity card of the personal representative and/or administrator
• Certified copy of the Identity card of the Beneficiary; 
• Duly executed CDS 7 and 
• Duly filled transfer of shares form. 

The above documents must be submitted through a Central Depository Agent (CDA) ie stockbroker or investment bank or custodian.  

TAXATION 

The Government does not impose tax implications on sale or transfer of shares on the individual transferee or transferor.