Significant Beneficial Owners Rules- Filing of form BEN-2

The Ministry of Corporate Affairs has issued the Companies (Significant Beneficial Owners) Rules, 2018 and later on Companies (Significant Beneficial Owners) Amendment Rules, 2019 on February 8, 2019. These Rules are applicable to all the companies in which the companies are required to file a return to the Registrar of Companies. The return shall state the Significant Beneficial Owners in the reporting company. This will provide the Government to keep a track of the actual holders of the ownership of the Corporate Entity.

What are the different types of Forms which are specified in SBO Rules?

The SBO Rules has provided the following forms:

What is Form No. BEN-1

Form No. BEN-1 is the one time declaration by the beneficial owner who holds or acquires significant beneficial ownership in the company. Further, 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.

What is the purpose of filing Form BEN-1?

Form BEN-1 shall be required to file for the following 2 purposes:

• One time declaration of Significant Beneficial Ownership under Section 90
• For Change in Significant Beneficial Ownership under Section 90

What is the due date of filing Form BEN-1?

The due date for filing Form BEN-1 shall be on or before 8th of May 2019 (i.e. within 90 days from the date of notification).

What is the due date of filing Form BEN-2?

Upon the receipt of declaration by the Company in Form BEN-1, the company shall be required to file e-Form BEN-2 with the Registrar of Companies. The Company shall be required to file Form BEN-2 within a period of 30 Days from the receipt of declaration by the company in Form BEN-1.

When Significant Beneficial Owner Rules are not applicable?

These Rules 2018 shall not apply to the extent the shares of the reporting company are held by

• The authority constituted under section 125(5) of the Act
• Its Holding Reporting Company
• Central Government/ Local Government or a State Authority
• Reporting Company/ Body Corporate or an Entity controlled by the Central Government/ State Government or partly by the Central Government or partly by one or more State Government.
• SEBI registered Investment Vehicle such as Mutual Funds, Alternative Investment Fund, Real Estate Investments, Infrastructure Investment Funds regulated by SEBI.
• Investments Vehicles regulated by RBI, IRDA or Pension Fund Regulatory and Development Authority.

What is Reporting Company here means?

Reporting Company means the company as defined under Section 2(20) of the Companies Act 2013. Therefore, Reporting Company means company incorporated under this Act or any other previous law.

What is meant by Significant Beneficial Owner?

“Significant Beneficial Owner” in relation to a reporting company means an individual referred to in Section 90(1) 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: –

• 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 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 right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone.

What is the duty of the reporting company under the SBO Rules?

Every reporting company shall take necessary steps to find out if there is any individual who is a significant beneficial owner in relation to that reporting company, and if so, identify him and cause such individual to make a declaration in Form No. BEN-1.

Every reporting company shall in all cases where its member (other than an individual), holds not less than ten per cent. of its

(a) shares

(b) voting rights

(c) right to receive or participate in the dividend or any other distribution payable in a financial year,

give notice to such member, seeking information in accordance with sub-section (5) of section 90, in Form No. BEN-4.

Every such member or shareholder will file the declaration of its holding to the company in Form BEN-1 by 08^th May, 2019 or in case of subsequent change or acquisition of significant ownership by such individual he shall file the declaration in Form BEN-1 within 30 days of such change and thereafter the company will file e-Form BEN-2 within 30 days of receipt of form BEN-1.

So there are two type of filing in these rules

One Time Filing

 Annual Filing

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