Companies (Significant Beneficial Owners) Rules, 2018

[Chinki Singhal]

The Ministry of Corporate Affairs vide its notification dated June 13, 2018 introduced the Companies (Significant Beneficial Owners) Rules, 2018 with the intention of identification of Significant Beneficial Owners who required to comply with certain formalities as per the above-mentioned rule.

Applicability

These rules are Applicable to Companies which has shareholders, other than individuals and natural persons and holding beneficial interest as per the prescribed limits

Exemption

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 (InvITs) regulated under SEBI Act.

Beneficial Owner (S.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, in shares of a company or the right to exercise, or the actual exercising of significant influence or control.

In general words, beneficial owner is entitled to all beneficial interest as mentioned below.

Beneficial Interest (S.89(10))

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;

• Exercise or cause to be exercised any or all of the rights attached to such share; or
• Receive or participate in any dividend or other distribution in respect of such share.

Significant Beneficial Owner(S.90(1) & Rule 2)

Significant Beneficial Owners referred as Individual who acting alone or together, or through one or more persons or trusts, holding ultimate beneficial interest of not less than 10 per cent in the shares of the Company or exercising significant influence but whose name is not entered in the register of members of a company as the holder of such shares.

Note:

For the purpose of calculation of 10% of beneficial interest in shares, Shares Includes Instrument in form of Global Depository Receipts, Compulsorily Convertible Preference Shares or Compulsory convertible debentures.

Compliance Requirement

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.

Note:-

1. The person to whom notice has been issue in Form No. BEN-4 shall revert to the Company within 30 days of Notice. (S.90(6))
2. The company shall,-
   • Where that person fails to give the company the information required by the notice within the time specified therein; or
   • Where the information given is not satisfactory, (Section 90(7) & Rule 6)

The Company shall apply to Tribunal within 15 days of the expiry of the period specified in Notice.

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