Declaration by Significant Beneficial Owner

The law stated in this post was valid from 14^th June 2018 till 7^th February 2019. The post on the law applicable from 8th February 2019 is posted here.

Section 90 of the Companies Act 2013 substituted by a new set of law. It is a drastic change to understand and need urgent attention for all companies. Amended Section 90 and rules made thereunder has already been notified with effect from 13^th June 2018 and 14^th June 2018. The deadline is on 12^th September 2018. In last post here, we discussed Significant Beneficial Interest. In this post, we will discuss the declaration, register and return of Significant Beneficial Ownership.

Declaration by Significant Beneficial Owner

As mentioned in the earlier post here, significant beneficial owner, unless from exempted categories,  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.

First and one-time Trigger

According to Rule 3(1), every significant beneficial owner shall file a declaration in Form BEN-1 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.

• Significant beneficial ownership as on 14^th June 2018;
• Declaration of such Significant Beneficial Ownership on or before 12^th September 2018 and
• Form BEN – 1.

On becoming Significant Beneficial Owner

According to Rule 3 (2), every individual, who, after the commencement of these rules, acquires significant beneficial ownership in a company, shall file a declaration in Form BEN-1 to the company, within thirty days of acquiring such significant beneficial ownership or in case of any change in such ownership.

Event Base trigger for existing SBOs

According to Rule 3(1), every significant beneficial owner shall file a declaration in Form BEN-1 to the company in which he holds the significant beneficial ownership and within thirty days in case of any change in his significant beneficial ownership.

Any change is not defined and/or quantified. All qualitative or quantitative changes need to be declared within 30 days.

Return of significant beneficial owners

According to 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.

Rule 4 prescribes Form BEN – 2 for the purpose. Where any declaration under rule 3 is received by the company, it shall file a return in Form BEN-2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt of the declaration by it.

The filing of BEN – 2 will be

• On receipt of Form BEN – 1
• Within 30 days of such receiving.

The return is event based and not periodical.

Register of significant beneficial owners

Section 90(2) Require every company to maintain a register of the interest declared by individuals and changes therein which shall include the name of the individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed.

Rule 5(1) Prescribe Form BEN – 3 for register of the significant beneficial owner.

Inspection of Register

According to Section 90(3) the register of Significant Beneficial Owner shall be open to inspection by any member of the company on payment of such fees as may be prescribed.

Rule 5(2) prescribe that he register of significant beneficial owners shall be open for inspection during business hours, at such reasonable time of not less than two hours, on every working day as the board may decide, by any member of the company on payment of such fee but not exceeding fifty rupees for each inspection.

Actual inspection time of two hours and chargeable fee shall be determined by the company.