Every individual who subsequently becomes a significant beneficial owner, or where his significant beneficial ownership undergoes any change, shall file a declaration in Form No. BEN-1 to the reporting company, within thirty days of acquiring such significant beneficial ownership or any change therein.
Section 89 of the Act requires a person, whose name is entered in the register of members of a company as a shareholder but who doesn’t hold beneficial interest in shares of beneficial interest, to make a declaration to the company registration specifying the name.
“Every individual who acts alone or together, or through one or more persons or trusts, including a trust and a person resident outside India, holds beneficial interests of not less than ten 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 of the Act.
As per the definition provided in the Act, the government is empowered to prescribe holding percentages other than the one specified for the determination of the SBO. Accordingly, the revised Rules provide the following definition –
“Significant Beneficial Owner in relation to a reporting company means an individual who possesses one or more of the following rights or entitlements in the Company, namely: –
- Holds indirectly, or together with any direct holdings, not less than 10% of the shares;
- Holds indirectly, or together with any direct holdings, not less than 10% of the voting rights in the shares;
- Has the right to receive or participate in not less than 10% of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;
- Has the right to exercise or actually exercises, directly or indirectly, significant influence or control, in any manner other than through direct holdings alone.
Declaration of the SBO – In case of ownership
A company is required to enter the following particulars of the beneficial owner in the register: the full name; the birth certificate number; the national identity number and the passport number; the nationality; the date of birth; the postal address; the business address; the residential address; and the telephone number. The process of declaration of SBO is as follows.
- The individual has to file ownership using Form No BEN-1 within 30 days of acquiring such ownership.
- Once receiving the declaration, the company files a return using Form No Ben-2 with the registrar within 30 days.
- Form No Ben-3 is the Register of Beneficial Owner holding Significant Beneficial Interest held by the Company and made available for inspection during business hours that vary; however, the amount should not exceed Rs. 50,000/-.
- Form NNo.Ben-4 is a notice given by the company, requiring the company to to provide details of the benefits to the employee.
Penalty in case of non-declaration:
Individual – Fine over 1 lakh up to 10 lakhs or imprisonment for up to one year
Company – Fine over 10 lakhs up to 50 lakhs
False information furnished will be penalized under Section 447 – Punishment for Fraud.
