In order to widen the scope and increase clarity and transparency, certain amendments were made to the Companies (Significant Beneficial Ownership) Rules, 2018 vide Companies (Significant Beneficial Ownership) Amendment Rules, 2019 dated 08-02-2019. Following are the Significant Beneficial Ownership Compliance under the Companies Act, 2013.
“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 10% of the shares;
ii. holds indirectly, or together with any direct holdings, not less than 10% of the voting rights in the shares;
iii. has 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;
iv. has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone:
By inserting various Explanations to this definition, the government tried to bring more clarity to the definition.
Following are the compliances that a company needs to ensure with respect to Significant Beneficial Ownership:
1) Identification of Significant Beneficial Owners
The reporting company shall find out the individuals who are significant beneficial owners by taking necessary steps and cause such individuals to make a declaration of significant beneficial ownership in Form No. BEN-1.
2) Declaration under Section 90
The following points merit consideration in this regard:
3) Return of significant beneficial ownership
The reporting company shall file a return with the Registrar in Form No. BEN-2 within 30 days of receipt of the declarations stated as above along with the prescribed fees.
4) Register of Significant Beneficial Ownership
The company shall be responsible for maintaining a register of Significant Beneficial Owners in Form No. BEN-3 shall be open for inspection by any member of the company during business hours on every working day at reasonable times for at least 2 hours. The inspection shall be subject to payment of prescribed fees not exceeding Rs. 50 for each inspection.
5) Notice Seeking Information from Members
A company can issue a notice in Form No. BEN-4 seeking information about significant beneficial ownership.
6) Application to the Tribunal
The reporting company may apply to the tribunal where: The information, as required by the notice in Form No. BEN-4 was not provided by any person
The above rules shall not apply to such shares of the reporting entity as held by the following entities:
Above were the significant beneficial ownership requirements that need to be observed by the companies. In case of any query, feel free to contact the professionals to receive expert advice and assistance.
In case you require any assistance with respect to Secretarial Compliance and Secretarial Audit, please feel free to contact the ASC Group
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