Note of Companies (Significant Beneficial Owners) Rules, 2018.
Important Definitions
1. "Registered Owner" means a person whose name is entered in the register
of members of a company as the holder of shares in that company but who
does not hold beneficial interest in such shares;
2. "Significant Beneficial Owner" means an individual referred to in sub-
section (1) of section 90 ( holding ultimate beneficial interest of not less
than ten per cent) read with sub-section [10] of section 89, but whose
name is not entered in the register of members of a company as the holder
of such shares, and the term 'significant beneficial ownership' shall be
construed accordingly;
Explanation l. - For the purpose of this clause, the significant beneficial
ownership, in case of persons other than individuals or natural persons,
shall be determined as under-
(i) where the member is a company, the significant beneficial owner is
the natural person, who, whether acting alone or together with other
natural persons, or through one or more other persons or trusts,
holds not less than ten per cent. share capital of the company or
who exercises significant influence or control in the company
through other means;
(ii) where the member is a partnership firm, the significant beneficial
owner is the natural person, who, whether acting alone or together
with other natural persons, or through one or more other persons or
trusts, holds not less than ten per cent. of capital or has entitlement
of not less than ten per cent. of profits of the partnership;
(iii) where no natural person is identified under (i) or (ii), the significant
beneficial owner is the relevant natural person who holds the
position of senior managing official;
(iv) where the member is a trust (through trustee), the identification
of beneficial owner(s) shall include identification of the author of
the trust, the trustee, the beneficiaries with not less than ten per
cent. interest in the trust and any other natural person exercising
ultimate effective control over the trust through a chain of control or
ownership;
Explanation 11. lt is hereby clarified that instruments in the form of
global depository receipts, compulsorily convertible preference shares
or compulsorily convertible debentures shall be treated as shares' for
the purpose of this clause;
3. For the purposes of Section 89 and Section 90, Beneficial Interest in a
share includes, directly or indirectly, through any contract, arrangement
or otherwise, the right or entitlement of a person alone or together with
any other person to—
(i) exercise or cause to be exercised any or all of the rights attached to
such share; or
(ii) receive or participate in any dividend or other distribution in respect of
such share
Disclosure Reqquirements by Shareholders (Regd Owner/ SBO)
Section 89 & Rule 9 of SBO Rules : Declaration in Respect of Beneficial
Interest in any Share by Registered Owner
(1) Where the name of a person is entered in the register of members of a
company as the holder of shares in that company but who does not hold the
beneficial interest in such shares, such person shall make a declaration in Form
MGT-4 to the company within a period of thirty days from the date on which his
name is entered/ any changes in the register of members of such company
specifying the name and other particulars of the person who holds the beneficial
interest in such shares.
(2) Every person who holds or acquires a beneficial interest in share of a
company shall make a declaration to the company specifying the nature of his
interest, particulars of the person in whose name the shares stand registered in
the books of the company and such other particulars as may be prescribed.
(3) Where any change occurs in the beneficial interest in such shares, the person
referred to in sub-section (1) and the beneficial owner specified in sub-section
(2) shall, within a period of thirty days from the date of such change, make a
declaration to the company in such form and containing such particulars as may
be prescribed.
(4) Where any declaration under section 89 is received by the company, the
company shall make a note of such declaration in the register of members and
shall file, within a period of thirty days from the date of receipt of declaration by
it, a return in 6Form [Link].6 with the Registrar in respect of such declaration
with fee.
Section 90(1) : Declaration in Respect of Beneficial Interest in any Share by
Significant Beneficial Owner
Every individual, who acting alone or together, or through one or more persons or
trust, including a trust and persons resident outside India, holds beneficial
interests, of not less than twenty-five per cent o r such other percentage as may
be prescribed, in shares of a company or the right to exercise, or the actual
exercising of significant influence or control as defined in clause ( 27) of section
2, over the company (herein referred to as "significant beneficial owner"), shall
make a declaration to the company, specifying the nature of his interest and
other particulars, in such manner and within such period of acquisition of the
beneficial interest or rights and any change thereof, as may be prescribed:
Provided that the Central Government may prescribe a class or classes of
persons who shall not be required to make declaration under this sub-section.
Declaration of significant beneficial ownership in shares under section 90
(1) Every significant beneficial owner shall file a declaration in Form No. BEN-I to
the company in which he holds the significant beneficial ownership on the date
of commencement of these rules within ninety days from such commencement
and within thirty days in case of any change in his significant beneficial
ownership.
(2) Every individual, who, after the commencement of these rules, acquires
significant beneficial ownershin in a company. shall file a declaration in Form
No. BEN-I to the company, within thirty days of acquiring such significant
beneficial ownership or in case of any change in such ownership.
Disclosure Requirements by Company
1. Section 90(2)- Every company shall maintain a register of the interest
declared by individuals under sub-section (1) and changes therein which
shall include the name of individual, his date of birth, address, details of
ownership in the company and such other details in Form BEN-3.
2. Section 90(3) - The register maintained under sub-section (2) shall be open
to inspection by any member of the company on payment of such fees as
may be prescribed.
3. Section 90(4) - Every company shall file a return of significant beneficial
owners of the company and changes therein with the Registrar containing
names, addresses and other details as may be prescribed within such
time, in such form and manner as may be prescribed.
4. Section 90 (5) - A company shall give notice, in Form BEN-4, to any person
(whether or not a member of the company) whom the company knows or
has reasonable cause to believe—
(a) to be a significant beneficial owner of the company;
(b) to be having knowledge of the identity of a significant beneficial
owner or another person likely to have such knowledge; or
(c) to have been a significant beneficial owner of the company at
any time during the three years immediately preceding the date on
which the notice is issued,
and who is not registered as a significant beneficial owner with the
company as required under this section.
5. Section 90 (6) - The information required by the notice under sub-section
(5) shall be given by the concerned person within a period not exceeding
thirty days of the date of the notice.
6. Section 90 (7) -The company shall,—
(a) where that person fails to give the company the information
required by the notice within the time specified therein; or
(b) where the information given is not satisfactory,
apply to the Tribunal within a period of fifteen days of the expiry of the
period specified in the notice, for an order directing that the shares in
question be subject to restrictions with regard to transfer of interest,
suspension of all rights attached to the shares and such other matters as
may be prescribed.
Compliance Requirement in brief under Companies (Significant Beneficial
Owners) Rules, 2018
S. No. Form/Return Purpose
1 BEN-1 Every Significant Beneficial Owner shall file a
declaration in Form No. BEN-I to the Company in
which he holds the Significant Beneficial Ownership
on the date of commencement of these rules within
90 days from such commencement and within 30
days in case of any change in his Significant
Beneficial Ownership
2 BEN-2 Company shall file Form No. BEN-2 with
the Registrar in respect of declaration, within a
period of 30 days from the date of receipt of
declaration BEN-1, along with the fees as prescribed
in companies (Registration offices and fees) Rules,
2014
3 BEN-3 The company shall maintain a register of significant
beneficial owners in Form No. BEN-3.
4 BEN-4 Company shall give notice seeking information in
Form No. BEN-4.
NON APPLICABILITY OF THE RULES
These rules are not made applicable to the holding of shares of companies/body
corporates, in case of pooled investment vehicles/investment funds such as
Mutual Funds, Alterative Investment Funds (AIFs), Real Estate Investment
Trusts(REITs) and Infrastructure Investment Trusts (lnvlTs) regulated under SEBI
Act.
