Think of Section 72 like a nominee you add to your bank FD or LIC policy — except here, it applies to shares and debentures held in a company. When a shareholder or debenture holder dies, who gets those securities? That's exactly what this section answers.
The basic rule is simple: Any holder of securities (shares, debentures, etc.) can nominate any person to receive those securities after their death. This nomination must be made in the prescribed manner (i.e., using the form specified in the Companies Rules). If the securities are held jointly — say Mr. Sharma and Ms. Iyer hold shares together — then all joint holders must nominate together, and the nominee gets the rights only when all joint holders have died.
Here's the part that trips students up — and it's exam gold: Section 72(3) contains a powerful overriding clause. Even if the shareholder's Will says something different, even if family law says something different, the nominee wins. The nominee gets the securities to the exclusion of all other persons. This doesn't mean the nominee becomes the legal owner forever — courts have clarified that the nominee holds the securities and must deal with them as per succession law — but for the company's purposes, the nominee is the person entitled. The nomination can be changed or cancelled anytime during the holder's lifetime.
One special provision worth remembering: if the nominee is a minor, the nominating holder can also appoint a person who will be entitled to the securities if the minor nominee dies during their minority. Think of it as a backup arrangement — very practical, very examinable.
Example 1 — Single Holder
Mr. Rajesh holds 500 equity shares of Rajesh & Co. Pvt. Ltd. (face value ₹10 each). He nominates his wife, Mrs. Rajesh, as nominee in Form SH-13. Mr. Rajesh later writes a Will leaving all his shares to his son.
Mr. Rajesh passes away in March 2026.
Who gets the shares?
Step 1: Section 72(3) applies — nomination overrides any Will or other disposition.
Step 2: Mrs. Rajesh, as the registered nominee, becomes entitled to all rights in the 500 shares.
Step 3: The company is required to transfer/transmit the shares to Mrs. Rajesh.
Answer: Mrs. Rajesh gets the shares, not the son, as far as the company is concerned.
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Example 2 — Joint Holders with Minor Nominee
Mr. Arjun and Ms. Priya jointly hold 1,000 debentures of ₹100 each (total value ₹1,00,000) in Sunrise Infra Ltd. They jointly nominate Arjun's son, Master Dev (age 8), as nominee. They also appoint Ms. Priya's sister as the person entitled in case Dev dies during minority.
Scenario: Both Arjun and Priya die in an accident.
Step 1: Under Section 72(2), nominee rights vest only on death of all joint holders — both have died, so condition is met.
Step 2: Master Dev (age 8) is the nominee → he is a minor → the appointed person (Ms. Priya's sister) steps in to manage entitlement until Dev attains majority.
Answer: Ms. Priya's sister becomes entitled to the 1,000 debentures (worth ₹1,00,000) on behalf of minor Dev, per the appointment made under Section 72(4).
📖 Bare Act text — Section 72, Companies Act 2013
(click to expand)
(1) Every holder of securities of a company may, at any time, nominate, in the prescribed manner, any person to whom his securities shall vest in the event of his death. (2) Where the securities of a company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, any person to whom all the rights in the securities shall vest in the event of 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, in respect of the securities of a company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the securities of the company, the nominee shall, on the death of the holder of securities or, as the case may be, on the death of the joint holders, become entitled to all the rights in the securities, of the holder or, as the case may be, of all the joint holders, in relation to such 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, it shall be lawful for the holder of the securities, making the nomination to appoint, in the prescribed manner, any person to become entitled to the securities of the company, in the event of the death of the nominee during his minority.