# Transmission of Shares on Death or Bankruptcy Is Not a Transfer

> When shares pass by operation of law on a shareholder's death or bankruptcy, section 109 of the Companies Act 2016 applies instead of the transfer rules — different documents, a 60-day registration deadline, and different stamp duty treatment.

- Category: company-secretary
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/company-secretary/share-transmission

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A shareholder in a two-person Sdn Bhd dies. The surviving director asks the secretary
to "do a share transfer to the widow". That instruction is wrong in almost every
particular — wrong section, wrong documents, wrong deadline, and it points at a stamp
duty charge that may not arise.

What has happened is a **transmission**, and the Act deals with it separately.

## Transfer and transmission are different events

A transfer is a voluntary act by a living shareholder, effected by a duly executed and
stamped instrument under s.105(1) and registered within **30 days** under s.106(1).

A transmission is the passing of the right to shares **by operation of law** — on death
or bankruptcy. Nobody signs anything to make it happen; the law moves the entitlement
and the paperwork catches up.

Section 105(4) draws the line expressly:

> Subsection (1) shall not affect any power of a company to register a person as a
> shareholder or debenture holder to whom the right to shares or debentures has been
> transmitted by operation of law.

So the requirement for a duly executed and stamped instrument does not reach a
transmission. Section 105(5) then adds a definitional point that trips people up:
"instrument of transfer" **includes** a written application for transmission of a
share, debenture or other interest to a personal representative. The written
application is treated as falling within the term for the purposes of s.105 — which is
why practitioners sometimes describe the process using transfer vocabulary even though
the substantive rules differ.

## The section 109 procedure

| Step | Requirement | Section |
| --- | --- | --- |
| Right passes by operation of law | Death or bankruptcy of the shareholder | s.109(1) |
| Person entitled notifies the company **in writing** that they wish to be registered | The trigger for the whole section | s.109(1) |
| Company accepts the grant as sufficient evidence | Probate or letters of administration | s.109(4) |
| Company registers the person | **within 60 days** of receiving the notification | s.109(5) |
| Company notifies SSM of the register change | **within 14 days** of the change | s.51(1) |

Section 109(7) identifies who is entitled on a death:

- **(a)** where the deceased was a **sole holder** — the legal personal representatives
- **(b)** where the deceased was a **joint holder** — the survivor

with the closing words preserving the deceased joint holder's estate's liability in
respect of any share jointly held.

Section 109(6) confirms the consequence of registration: the registered holder gets the
same dividends and other advantages, and the same rights in relation to meetings, voting
and otherwise.

Section 109(8) makes contravention an offence for the company and every officer, with a
fine up to RM10,000 and RM500 per day for a continuing offence.

## The election that turns transmission back into transfer

Section 109(2) covers the common case where the executor does not want the shares in
their own name:

> …if the person referred to in that subsection elects to have another person
> registered, he shall testify his election by **executing to that person a transfer**
> of the share or debenture.

At that moment the transaction changes character. Section 109(3) applies all the
limitations, restrictions and provisions of the subdivision relating to the right to
transfer and the registration of transfers to that notice or transfer — as if the death
or bankruptcy had not occurred and the document were signed by the deceased or bankrupt
shareholder.

Practically, that means the transfer route applies to the onward step: an instrument, the
s.106(1) thirty-day registration duty, the refusal machinery, any pre-emption or
director discretion in the constitution, and the Stamp Act 1949 obligation to stamp
within 30 days of execution.

This is the fork the market misses. **Registering the executor** is transmission.
**Registering the beneficiary or a buyer instead** is a transfer executed by the
executor, and everything that attaches to a transfer attaches to it.

## Stamp duty: why the treatment differs

Item 32(b) of the First Schedule to the Stamp Act 1949 charges 0.3% on the transfer of
shares, on the price or the value, whichever is greater, with the transferee liable
under item 5 of the Third Schedule.

That charge attaches to an **instrument**. In a pure transmission there is no
instrument of transfer between two parties — there is a grant of probate and a written
notification. Where the personal representative elects under s.109(2), there is a
transfer instrument, and the ordinary charge and the 30-day s.47 deadline apply to it.

Because the outcome turns on which documents are actually executed rather than on a
label, and because adjudication practice matters here, **confirm the treatment with
LHDN for the specific documents before assuming no duty arises**. That question is
recorded in this article's verification list rather than answered from secondary
sources.

## Trustees and executors on the register

Section 110(1) allows a trustee, executor or administrator of a deceased person's
estate who was registered as the holder to become registered as holder **in that
representative capacity**, and limits their liability to what the deceased would have
faced had the share remained in the deceased's name.

Section 110(2) extends the same protection where the deceased was beneficially entitled
but not the registered holder, with the consent of the corporation and of the registered
holder.

Registering in a representative capacity is worth doing deliberately. It is the
difference between an executor holding shares as executor and an executor holding
shares personally with the liability that follows.

## Notices and meetings in the meantime

Section 321(2) covers the gap between death or bankruptcy and registration: the
reference to a member entitled to notice of a meeting **includes** a person entitled to
a share in consequence of the death or bankruptcy of a member who, but for that event,
would have been entitled to receive notice — provided the company has been notified of
that entitlement **in writing**.

So the written notification does two jobs. It starts the s.109(5) sixty-day clock, and
it puts the person entitled onto the notice list for members' meetings. Until it is
given, the company is entitled to treat the registered shareholder as the only person
entitled to vote, receive notices and receive distributions under s.101(2).

## What else the death triggers

- **Beneficial ownership.** Where the deceased was a beneficial owner or the
  transmission changes who ultimately controls the company, the Division 8A clocks run:
  entry in the internal register within 14 days of receipt under s.60C(4), then
  lodgement through e-BOS within 14 days of that entry under s.60B(3) and (4).
- **The board.** If the deceased was also the sole director, s.209(5) allows the
  Registrar to strike the company off where no director has been appointed within
  **six months** of the last director's death. That is a much harder deadline than
  anything in s.109.
- **Share certificates.** Where a certificate was issued and cannot be found, s.104 and
  s.98(2) allow registration on evidence of loss or destruction.

## Common mistakes

**Preparing a transfer instrument to register the executor.** Section 105(4) removes the
need for one. What the company wants is the written notification and the grant.

**Applying the 30-day clock.** Section 109(5) gives **60 days** from the notification.
Section 106(1)'s 30 days belongs to transfers.

**Demanding a death certificate plus statutory declarations plus an indemnity.** Section
109(4) obliges the company to accept the grant of probate or letters of administration as
sufficient evidence of the grant.

**Registering the beneficiary directly without a transfer.** If the person entitled wants
someone else on the register, s.109(2) requires them to execute a transfer to that person,
and s.109(3) applies the transfer rules to it.

**Forgetting the s.51 notification.** The register entry is one duty; telling SSM within
14 days is another.

**Ignoring the survivor rule on joint holdings.** Under s.109(7)(b) the survivor takes,
not the estate — which is frequently the opposite of what the will says, and worth
raising with clients before it becomes a dispute.

## What's next

Get the written notification in early, dated and acknowledged. It starts the 60-day
clock, and under s.321(2) it also secures the person's right to receive notice of
members' meetings while the estate is administered.

For the voluntary sale route, including stamping and the 30-day register duty, see
`share-transfer`. For the duty computation where a transfer instrument is executed, see
`stamp-duty-share-transfer`.

## Sources

- Companies Act 2016 (Act 777), reprint as at 1 August 2022 — ss.105, 109, 110 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)
- Companies Act 2016 (Act 777) — ss.51, 101, 209 and 321 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)
- Garis Panduan Mengenai Duti Setem Ke Atas Suratcara Pindah Milik Saham Bagi Saham Syarikat Yang Tidak Tersenarai Di Bursa Malaysia Berhad — https://www.hasil.gov.my/wp-content/uploads/GP_SAHAM_2019_23062020_1.pdf (LHDN)

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