SHARESCentral

Section 10A of The State Bank of India Act, 1955

1[10A. Right of registered shareholders to nominate.--(1) Every individual registered shareholder may, at any time, nominate, in the prescribed manner, an individual to whom all his rights in the shares shall vest in the event of his death.

(2)Where the shares are registered in the name of more than one individual jointly, the joint holders may together nominate in the prescribed manner, an individual to whom all their rights in the shares shall vest in the event of the death of all the joint holders.
(3)Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, where a nomination in respect of shares is made in the prescribed manner and which purports to confer on the nominee the right to vest the shares, the nominee shall, on the death of the shareholder or, as the case may be, on the death of all the joint holders, become entitled to all the rights of the shareholder or, as the case may be, of all the joint holders, in relation to such shares and all other persons shall be excluded unless the nomination is varied or cancelled in the prescribed manner.
(4)Where the nominee is a minor, it shall be lawful for the individual registered holder of the shares to make nomination to appoint, in the prescribed manner, any person to become entitled to the shares in the event of his death during the minority of the nominee.]

Summary

Any individual registered shareholder of the State Bank can nominate another person to receive all their share rights if they die.
If shares are owned jointly by more than one person, the joint owners can together nominate a single person who will receive the share rights after all the joint owners have died.
A valid nomination is extremely powerful and overrides any other laws, wills, or asset distributions.
When the shareholder or all joint shareholders die, the nominee gets all the share rights and everyone else is excluded from those shares, unless the nomination was changed or canceled before death.
If the nominated person is a minor (under legal age), the shareholder can appoint another person who will be entitled to hold or manage the shares if the shareholder dies while the nominee is still a minor.

Practical examples

1Anil Mehta holds 50 shares of the State Bank of India in his own name. He formally nominates his sister, Priya Mehta, as his nominee. After Anil passes away in 2012, Priya automatically becomes entitled to all the rights of those 50 shares, even if Anil's children contest it under his personal will.

2Dev and Lata joint-own 100 shares of the State Bank. They jointly nominate their son, Rahul. Dev dies in 2014, leaving Lata as the sole surviving owner. When Lata passes away in 2016, Rahul becomes the sole owner of the shares.

3Seema Gupta nominates her 8-year-old grandson, Kabir, to receive her 500 shares. In the nomination form, she appoints her daughter, Neha, to receive the shares if Seema dies while Kabir is still a minor. Seema passes away in 2018 when Kabir is 10, so Neha takes title to the shares for Kabir.

FAQ

1. Who is allowed to make a nomination under Section 10A?

Any individual registered shareholder, or joint individual shareholders acting together, can make a nomination.

2. Does a will or personal law override a nomination made under Section 10A?

Yes, Section 10A(3) states that a nomination made in the prescribed manner overrides any other law or testamentary disposition (like a will), excluding all other claimants.

3. Can a joint shareholder nominate someone on their own?

No, Section 10A(2) states that joint holders must make the nomination together to designate an individual who will inherit the rights after all the joint holders have died.

4. What happens if the nominee is a minor when the shareholder dies?

Under Section 10A(4), the shareholder can appoint another person who will become entitled to the shares if the shareholder dies while the nominee is still a minor.

5. Can a nomination be changed or canceled after it is made?

Yes, a nomination can be varied or canceled in the prescribed manner.

Test yourself

Q1.Under Section 10A of The State Bank of India Act, 1955, what is the legal effect of a share nomination if the shareholder also leaves a conflicting instruction in their will?

Q2.Under Section 10A of The State Bank of India Act, 1955, if shares are held jointly by three individuals, when does the nominee become entitled to the rights of those shares?

Q3.Under Section 10A of The State Bank of India Act, 1955, if a shareholder nominates a minor, what additional step are they legally permitted to take?

Q4.Under Section 10A of The State Bank of India Act, 1955, how can a registered nomination be altered or revoked?

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