Deed of Family Settlement (DFS)

The Securities and Exchange Board of India (Sebi) has opposed an appeal filed by Kirloskar Oil Engines Ltd (KOEL) in the Securities Appellate Tribunal (SAT) challenging the regulator’s advisory to the company to disclose the Deed of Family Settlement (DFS). 

Draft of Family Settlement (DFS)

Features of DFS

• A voluntary agreement based on mutual consent.
• A legally binding contract on all parties involved.
• Deals mainly with the distribution of movable and immovable properties within the family.
• Not considered a “transfer of property” but a recognition of existing rights.

Legal Formality to form DFS

• Writing the agreement in clear terms and details of the settlement.
• Members for the settlement must be family members.
• Signature of witnesses with the agreement so that the document can be authenticated and proved credible.
• Registration under the Indian Registration Act, 1908 would be recommended for better enforceability.
• There may be the need for payment of stamp duty in some states for registration purposes.

DFS Documents

• Introductory, Preamble, Information about the property, Terms of Settlement, Signature, Witness’s details.

Lawsuit Legality of DFS

• Is legally enforceable in a court of law
• Can be litigated in the court only when it is under fraud, undue influence, and coercion.

Use of DFS

• Partitioning of ancestral properties, settlement of succession disputes, division of assets held jointly by people, litigations involving property issues avoided.

SEBI Issued a Directive on Transfer of Shareholdings