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Ashok Singh had bought an insurance policy in 2000. When he passed away in 2008, his elder son and wife ended in a legal battle because while the son was the nominee, his wife was the legal heir. Ideally, the nominee and the heir are the same. But if they are different, the law depicts a nominee as only a trustee. This is true for all financial instruments, except shares and debentures. Says Sajid Mohamed, partner at PDS Associates: "If one is a nominee to investments in shares or debentures, he or she has all rights to liquidate the share, even without the legal heir's permission. That is, a nominee is superior to a legal heir according to the Companies Act.&" Under Section 109A of the Companies Act, if the nomination is made under procedure prescribed by law, he/she will be entitled to become the rightful owner of shares. And, such right shall exclusively favour the nominee and exclude all other persons. In comparison, Section 39 of the Insurance Act says the appoin...

Lessons from the Satyam scam The signs of the Satyam scam should have come almost three weeks before when Ramalinga Raju proposed to buy a controlling stake in sister concern Maytas for around Rs 7,000 crore. When the institutional investors opposed vehemently, the company decided to go against it. Three weeks later on January 7, Raju confessed to 'cooking' Satyam's books. Within the next few days, the share price crashed to almost Rs 10 causing losses of over Rs 5,000 crore to around 300,000 investors. In the past five years, a number of companies have been suspended or fallen into bad times with Pyramid Saimira, Deccan Chronicle and Kingfisher Airlines being some of the more prominent examples. Usually, in such situations, individual investors get caught on the wrong side even if they have invested in such stocks through mutual funds. Sample this: When Satyam declared that they are withdrawing the proposal to buy the controlling stake in Maytas, many brokerages were quick...