Search

Disclosure of Significant Beneficial Ownership

The Ministry of Corporate Affairs (MCA) on June 13, 2018 notified Section 90 of the Companies Act, 2013 (Act); and notified Companies (Significant Beneficial Owners) Rules 2013. This rule came into effect on June 14, 2018. These provisions require certain compliances to be followed by a Significant Beneficial Owner and a company.


Who is a “Significant Beneficial Owner”?


“Significant Beneficial Owner” means an individual who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds ultimate beneficial interest of not less than 10% in shares of a company or the right to exercise, or the actual exercising of significant influence or control in a company.


This applies to the (i) individual who is acting alone or together with one or more persons (includes partnerships) (ii) includes a trust (iii) person resident in India or outside India.

















Where no natural person is identified in point no. A and B in the table above, the Significant Beneficial Owner is the relevant natural person who holds the position of senior managing official.


What is the obligation of Significant Beneficial Owner?

  • Every existing Significant Beneficial Owner is obligated to file a declaration in Form No. BEN-1 with the respective company. This declaration is to be made by September 10, 2018.

  • Every Significant Beneficial Owner shall file any change in his significant beneficial ownership within 30 days to the company.

  • Every individual, who acquires significant beneficial ownership in a Company, shall file a declaration in Form No.BEN-1 to the Company within 30 days of acquiring such significant beneficial ownership.

What are the obligations of the Company?

  • The company receiving the declaration has to maintain a register of Significant Beneficial Owners.

  • The company has to file a return in Form No. BEN-2 of significant beneficial owners of the company and changes therein with the Registrar within 30 days from the date of receipt of the declaration.

  • Maintain a register of significant beneficial owner in Form No. BEN – 3.

  • Also, if the Company knows or has reason to believe that someone is s Significant Beneficial Owner (or has been a Significant Beneficial Owner in last 3 years) and is not registered with the company as a Significant Beneficial Owner then, the company is required to give notice to such person seeking information in Form No. BEN-4.

Consequences of non-disclosure by Significant Beneficial Owner

  • Shares may be made subject to the restriction on transfer.

  • All rights in shares held by such Significant Beneficial Owner shall be suspended, including, voting rights, dividend etc.

  • The MCA may impose penalty of up to INR 1,00,000/- and INR 1,000 per day the default continues.

  • Such Significant Beneficial Owner can be charged with fraud under Section 447 of Companies Act, 2013.

Consequences of non-compliance by a company?


Fine ranging from INR 10,00,000/- to INR 50,00,000/- for company and INR 1,000 per day the default continues.


Who is exempted from definition of Significant Beneficial Owner?

  • Mutual Funds;

  • Alternative Investment Funds (AIFs); and

  • Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (lnvlTs).

2 views

Recent Posts

See All

About us

Career

Contact us

Terms & Conditions

Privacy Policy

Contact Number

Email Address

  • Facebook
  • LinkedIn
  • Instagram
  • Twitter

© LexStart Consultancy Private Limited | CIN: U74999MH2015PTC265981

REGISTERED OFFICE - 7916, Tulsiani Chambers, Nariman Point, Mumbai - 400021