FNB is the executor of an estate and was given original share certificates (local SA shares; Sasol, FirstRand and so on) and has taken nine months to dematerialise and sell them. They tell me this is normal. How long should it take to dematerialise and sell shares, as I believe this is not a long process?
Thank you for your question.
Your question is about share certificates that were handed in to the executors of an estate and the dematerialisation and sale of the shares has taken nine months.
Dematerialisation refers to the process whereby paper share certificates are replaced with electronic records of ownership. The certificates, once handed in by investors, are sent to the relevant transfer secretary for validation. Once the authenticity of the certificate has been verified, the actual dematerialisation process begins. For all intents and purposes, once you have submitted your share certificate for dematerialisation, it ceases to exist. Shares cannot be sold unless they have been dematerialised.
It is not unusual for dematerialisation within an estate to take several months.
The reasons for this will be found in the procedures associated with managing a deceased estate.
What is involved
Firstly, all the necessary documents must be handed to the executor that was named in the will of the deceased.
Once the executor has all the documents necessary to apply for their appointment as executor, they can apply to the Master of the High Court to be appointed as the executor. This process can take a while, especially since the country has been in the grip of Covid-19. In normal circumstances, it takes approximately a month and currently, it takes longer because of the delays caused by Covid-19.
Once the executor is appointed, they must advertise the death in two local newspapers and the Government Gazette. Creditors then have 30 days to let the executor know about their claims against the estate. The executor must also contact the South African Revenue Service (Sars) to confirm if any taxes are outstanding, and must get valuations of all the assets.
Once they have collected all this information, they can compile the liquidation and distribution account of the deceased.
Once the liquidation and distribution account is complete, the executor can present it to the Master of the High Court for approval. These steps must be taken within six months. And then you have to wait for the Master to approve the account.
Only once the liquidation and distribution account has been approved can the executor start with the dematerialisation process.
While this is not a lengthy process it has always required original documents, and the fact that many employees have had to work from home because of Covid-19 has complicated matters.
Other ways had to be found to authenticate the original documents – and therein lies the delay.
An interesting point to note …
In the period between death and the appointment of an executor, you are really in no-man’s land, because nobody can act on your behalf and nobody can do anything with your assets during that period.
Once an executor is appointed that changes slightly. The executor would be a part of the will, and would then do as per the instructions within the will. In a will you could say “sell my Shoprite shares, give the cash to my wife” or “give my wife the Shoprite shares”, or you could say nothing.
The general principle is that an executor passes over assets to beneficiaries unless they must realise them to pay creditors.
To answer your question then, the shares or share certificates are in a holding position for the six to nine months that the above process of the estate takes.
And only then can the executor dematerialise your shares and sell them, if that is the instruction in the will. In my opinion, it did not take long at all.
I hope this answer gives you more clarity on the dematerialisation and sale of the shares.