Declaration in Respect of Beneficial Interest in any Share
Section 89
(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 within such time and in such form as may be prescribed to the
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) The Central Government may make rules to provide for the manner of
holding and disclosing beneficial interest and beneficial ownership under
this section.
(5) If any person fails to make a declaration as required under sub-section
(1) or sub-section (2) or sub-section (3), he shall be liable to a penalty
of fifty thousand rupees and in case of continuing failure, with a further
penalty of two hundred rupees for each day after the first during which
such failure continues, subject to a maximum of five lakh rupees.
(6) Where any declaration under this section is made to a company, the
company shall make a note of such declaration in the register concerned
and shall file, within 2&3[thirty days] from the date of receipt of declaration
by it, a return in the prescribed form with the Registrar in respect of such
declaration with such fees or additional fees as may be
prescribed 4[Omitted].
(7) If a company, required to file a return under sub-section (6), fails to do so
before the expiry of the time specified therein, the company and every
officer of the company who is in default shall be liable to a penalty of one
thousand rupees for each day during which such failure continues, subject
to a maximum of five lakh rupees in the case of a company and two lakh
rupees in case of an officer who is in default.
(8) No right in relation to any share in respect of which a declaration is
required to be made under this section but not made by the beneficial
owner, shall be enforceable by him or by any person claiming through
him.
(9) Nothing in this section shall be deemed to prejudice the obligation of a
company to pay dividend to its members under this Act and the said
obligation shall, on such payment, stand discharged.
(10) For the purposes of this section 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.
(11) The Central Government may, by notification, exempt any class or
classes of persons from complying with any of the requirements of this
section, except sub-section (10), if it is considered necessary to grant such
exemption in the public interest and any such exemption may be granted
either unconditionally or subject to such conditions as may be specified in
the notification.
Rule 9 Declaration in Respect of Beneficial Interest in Any Shares
(1) 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 the beneficial
interest in such shares (hereinafter referred to as "the registered owner"), shall
file with the company, a declaration to that effect in Form
[Link].4 2[Omitted], within a period of thirty days from the date on which his
name is entered in the register of members of such company:
Provided that where any change occurs in the beneficial interest in such shares,
the registered owner shall, within a period of thirty days from the date of such
change, make a declaration of such change to the company in Form
[Link].4 3[Omitted].
(2) Every person holding and exempted from furnishing declaration or acquiring
a beneficial interest in shares of a company not registered in his name
(hereinafter referred to as "the beneficial owner") shall file with the company, a
declaration disclosing such interest in Form No. MGT.5 4[Omitted], within thirty
days after acquiring such beneficial interest in the shares of the company:
Provided that where any change occurs in the beneficial interest in such shares,
the beneficial ownr shall, within a period of thirty days from the date of such
change, make a declaration of such change to the company in Form
[Link].5 5[Omitted].
(3) 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 in8[Form [Link].6] with the Registrar in respect of such
declaration with fee.
(4) Every company shall designate a person who shall be responsible for
furnishing, and extending co-operation for providing, information to the Registrar
or any other authorised officer with respect to beneficial interest in shares of the
company.
(5) For the purpose of sub-rule(4), the company may designate-
(i) a company secretary, if there is a requirement of appointment of such
company secretary under the Act and the rules made thereunder; or
(ii) a key managerial personnel, other than the company secretary; or
(iii) every director, if there is no company secretary or key managerial personnel.
(6) Until a person is designated as referred under sub-rule (4), the following
persons shall be deemed to have been designated person;
(i) company secretary, if there is a requirement of appointment of such company
secretary under the Actand the rules made there under ;or
(ii) every Managing Director or Manager, in case a company secretary has not
been appointed; or
(iii) every director, if there is no company secretary or a Managing Director or
Manager.
(7) Every company shall inform the details of the designated person in Annual
return.
(8) If the company changes the designated person at any time, it shall intimate
the same to the Registrar in e-form GNL-2 specified under the Companies
(Registration Offices and Fees) Rules,2014.
Provided that nothing contained in this rule shall apply in relation to a trust
which is created, to set up a Mutual Fund or Venture Capital Fund or such other
fund as may be approved by the Securities and Exchange Board of India
MGT-4 Register Owner
MGT-5 Beneficial Owner
MGT-6 Reporting Company
Register of significant beneficial owners in a company
Section 90
(1) 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. or 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.
(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 as
may be prescribed.
(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.
(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.
(4A) Every company shall take necessary steps to identify an individual who is a
significant beneficial owner in relation to the company and require him to comply with the
provisions of this section.
(5) A company shall give notice, in the prescribed manner, 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.
(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.
(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.
(8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of
being heard to the parties concerned, make such order restricting the rights attached with the shares
within a period of sixty days of receipt of application or such other period as may be prescribed.
10, 5
[ [ 3[(9) The company or the person aggrieved by the order of the Tribunal may make an application
to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period
of one year from the date of such order:
Provided that if no such application has been filed within a period of one year from the date of the
order under sub-section (8), such shares shall be transferred,without any restrictions,to the authority
constituted under sub-section (5) of section 125, in such manner as may be prescribed;]]]
(9A) The Central Government may make rules for the purposes of this section.]
(10) If any person fails to make a declaration as required under sub-section (1), he shall be liable
to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of
one thousand rupees for each day after the first during which such failure continues, subject to a
maximum of two lakh rupees.
(11) If a company, required to maintain register under sub-section (2) and file the information
under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so
or denies inspection as provided therein, the company shall be liable to a penalty of one lakh
rupees and in case of continuing failure, with a further penalty of five hundred rupees for each
day, after the first during which such failure continues, subject to a maximum of five lakh rupees
and every officer of the company who is in default shall be liable to a penalty of twenty-five
thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees
for each day, after the first during which such failure continues, subject to a maximum of one lakh
rupees.
(12) If any person wilfully furnishes any false or incorrect information or suppresses any material
information of which he is aware in the declaration made under this section, he shall be liable to action
under section 447.
2- (2) Definitions
(l) In these rules, unless the context otherwise requires,-
(a) "Act" means the Companies Act,2013 (18 of 2013);
[(b) "control" means control as defined in clause (27) of section 2 of the Act
1
(c) "form" means the form specified in Annexure to these rules;
(d) "majority stake" means;-
(i) holding more than one-half of the equity share capital in the body corporate; or
(ii) holding more than one-half of the voting rights in the body corporate; or
(iii) having the right to receive or participate in more than one-half of the distributable dividend or any
other distribution by the body corporate;
(e) "partnership entity" means a partnership firm registered under the Indian Partnership Act,7932 (9
of 1,932) or a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6
of 2009);
(f) "reporting company" means a company as defined in clause (20) of section 2 of the Act, required to
comply with the requirements of section 90 of the Act;
(g) "section" means a section of the Act;
(h) "significant beneficial owner" in relation to a reporting company means an individual referred to in
sub-section (1) of section 90, who acting alone or together, or through one or more persons or trust,
possesses one or more of the following rights or entitlements in such reporting company, namely:-
(i) holds indirectly, or together with any direct holdings, not less than ten per cent. of the shares;
(ii) holds indirectly, or together with any direct holdings, not less than ten per cent. of the voting rights
in the shares;
(iii) has right to receive or participate in not less than ten per cent. of the total distributable dividend, or
any other distribution, in a financial year through indirect holdings alone, or together with any direct
holdings;
(iv) has right to exercise, or actually exercises, significant influence or control, in any manner other
than through direct-holdings alone:
Explanation I - For the purpose of this clause, if an individual does not hold any right or entitlement
indirectly under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial
owner.
Explanation II - For the purpose of this clause, an individual shall be considered to hold a right or
entitlement directly in the reporting company, if he satisfies any of the following criteria, namely.'
(i) the shares in the reporting company representing such right or entitlement are held in the name of
the individual;
(ii) the individual holds or acquires a beneficial interest in the share of the reporting company under
sub-section (2) of section 89, and has made a declaration in this regard to the reporting company.
Explanation III - For the purpose of this clause, an individual shall be considered to hold a right or
entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of
a member of the reporting company, namely: -
(i) where the member of the reporting company is a body corporate (whether incorporated or
registered in India or abroad), other than a limited liability partnership, and the individual,-
(a) holds majority stake in that member; or
(b) holds majority stake in the ultimate holding company (whether incorporated or registered in India
or abroad) of that member;
(ii) where the member of the reporting company is a Hindu Undivided Family (HUF) (through karta),
and the individual is the karta of the HUF;
(iii) where the member of the reporting company is a partnership entity (through itself or a partner),
and the individual,-
(a) is a partner; or
(b) holds majority stake in the body corporate which is a partner of the partnership entity; or
(c) holds majority stake in the ultimate holding company of the body corporate which is a partner of
the partnership entity.
(iv) where the member of the reporting company is a trust (through trustee), and the individual,-
(a) is a trustee in case of a discretionary trust or a charitable trust;
(b) is a beneficiary in case of a specific trust;
(c) is the author or settlor in case of a revocable trust.
(v) where the member of the reporting company is,-
(a) a pooled investment vehicle; or
(b) an entity controlled by the pooled investment vehicle,
based in member State of the Financial Action Task Force on Money Laundering and the regulator of
the securities market in such member State is a member of the International Organization of
Securities Commissions, and the individual in relation to the pooled investment vehicle,-
(A) is a general partner; or
(B) is an investment manager; or
(C) is a Chief Executive Officer where the investment manager of such pooled vehicle is a body
corporate or a partnership entity.
Explanation IV-Where the member of a reporting company is,
(i) a pooled investment vehicle; or
(ii) an entity controlled by the pooled investment vehicle,
based in a jurisdiction which does not fulfil the requirements referred to in clause (v) of Explanation III,
the provisions of clause (i) or clause (ii) or clause (iii) or clause (iv) of Explanation III, as the case may
be, shall apply.
Explanation V - For the purpose of this clause, if any individual, or individuals acting through any
person or trust, act with a common intent or purpose of exercising any rights or entitlements, or
exercising control or significant influence, over a reporting company, pursuant to an agreement or
understanding, formal or informal, such individual, or individuals, acting through any person or trust,
as the case may be, shall be deemed to be 'acting together'.
Explanation VI - For the purposes of this clause, the instruments in the form of global depository
receipts, compulsorily convertible preference shares or compulsorily convertible debentures shall be
treated as 'shares'.
(i) "significant influence" means the power to participate, directly or indirectly, in the financial and
operating policy decisions of the reporting company but is not control or joint control of those policies]
(2) Words and expressions used in these rules but not defined and defined in the Act or in Companies
(Specification of Definitions Details) Rules, 2014 shall have the meanings respectively assigned to
them in the Act and the said Rules
BEN-3 Register of SBO
BEN-4 Notice seeking information about SBO
BEN-2 intimation to ROC
