Eform BEN- 2


BEN- 2 FORM

EForm BEN - 2

The Ministry of Corporate Affairs vides its notification no. G.S.R. 466(E)dated July 1, 2019, has substituted eForm BEN - 2 - Return to the Registrar in respect of declaration under section 90.



Background

Significant Beneficial Owner:-SBO is an individual whose name is not entered in the Register of members of the Company but exercising significant influence either alone or together with other persons.

The intention of the legislature behind the provisions of SBO is to track the Individual who is the beneficial owner behind all the artificial persons like Company, Trust, LLP, Partnership Firm. Since the provisions have been framed to identify the ultimate beneficial owners.



Provisions

Meaning of SBO

As per the amended Section 90 of the Companies Act, 2013 (‘Act’), SBO is referred to as-

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 interest, of not less than twenty-five percent. 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.

As per SBO Rules: SBO in relation to a reporting company means an individual referred to in subsection (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:-

  1. holds indirectly, or together with any direct holdings, not less than ten percent. of the shares;
  2. holds indirectly, or together with any direct holdings, not less than ten percent. of the voting rights in the shares;
  3. has right to receive or participate in not less than ten percent. of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;
  4. has the right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone:

Explanation I. – For the purpose of this clause, if an individual does not hold any right or entitlement indirectly under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial owner.



Meaning of Direct Holding

An individual shall be considered to hold a right or entitlement directly in the reporting company if he satisfies any of the following criteria, namely.–

  1. the shares in the reporting company representing such right or entitlement are held in the name of the individual;
  2. the individual holds or acquires a beneficial interest in the share of the reporting company under subsection (2) of section 89, and has made a declaration in this regard to the reporting company.


Meaning of indirect holding:

An individual shall be considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member of the reporting company, namely:-

  1. where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual,––
    1. holds the majority stake in that member, or
    2. holds the majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member;
  2. where the member of the reporting company is a Hindu Undivided Family (HUF) (through Karta), and the individual is the Karta of the HUF;
  3. where the member of the reporting company is a partnership entity (through itself or a partner), and the individual;
    1. is a partner; or
    2. holds the majority stake in the body corporate which is a partner of the partnership entity,
    3. holds the majority stake in the ultimate holding company of the body corporate which is a partner of the partnership entity.
  4. where the member of the reporting company is a trust (through the trustee), and the individual,-
    1. is a trustee in case of a discretionary trust or a charitable trust;
    2. is a beneficiary in case of a specific trust;
    3. is the author or settlor in case of a revocable trust.
  5. where the member of the reporting company is,-
    1. a pooled investment vehicle; or
    2. an entity controlled by the pooled investment vehicle, based in member State of the Financial Action Task Force on Money Laundering and the regulator of the securities market in such member State is a member of the International Organization of securities commissions, and the individual in relation to the pooled investment vehicle,-
    1. is a general partner; or
    2. is an investment manager; or
    3. is a Chief Officer where the investment manager of such a pooled vehicle is a body corporate or a partnership entity.


Meaning of Persons Acting together

If any individual, or individuals acting through any person or trust, act with a common intent or purpose of exercising any rights or entitlements, or exercising control or significant influence, over a reporting company, pursuant to an agreement or understanding, formal or informal, such individual, or individuals, acting through any person or trust, as the case may be, shall be deemed to be ‘acting together’.



Meaning of Significant Influence

The power to participate, directly or indirectly, in the financial and operating policy decisions of the reporting company but is not control or joint control of those policies.



Duty of the reporting company

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

  1. shares, or
  2. voting rights, or
  3. right to receive or participate in the dividend or any other distribution payable in a financial year,

give notice to such member, seeking information (a declaration in Form No. BEN-1.) in accordance with subsection (5) of section 90, in Form No.BEN-4.



Declaration of significant beneficial ownership under section 90.-

  1. Every individual who is a significant beneficial owner in a reporting company shall file a declaration in Form No. BEN-1 to the reporting company within ninety days from such commencement of Rules (Rules Notifies on February 8, 2019).
  2. 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.


Due date for receiving Declaration

According to Rule 3(1), every individual who is a significant beneficial owner in the reporting company on the date of commencement of these amendment rules shall file a declaration in Form BEN-1 to the reporting Company within 90 days from the commencement of these rules. i.e. May 8, 2019 (90 days from February 8, 2019).



Return of significant beneficial owners in shares

Upon receipt of declaration under rule 3, the reporting company shall file a return in Form No. BEN-2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt of such declaration by it, along with the fees as prescribed in Companies (Registration offices and fees) Rules, 2014.



Due Date for filing eForm BEN-2

Eform BEN-2 is required to be filed within 30 days of receipt of the Declaration under Rule 3, since the due date of filing of declaration as per Rule 3 is May 8, 2019, and therefore the due date of filing of eForm shall be June 7, 2019. But the eForm BEN-2 was deployed by MCA on its website on July 1, 2019, therefore as of now the due date of filing of eForm BEN-2 is July 30, 2019 (thirty days from the deployment of eForm BEN-2)



Certification by Practicing Professional

The eForm requires certification by a Practicing Professional like usual certification in other MCA forms.



Attachment

The declaration under Section 90 read along with Rule 3 is required to be attached mandatorily.



Fees for filing eForm BEN-2

Nominal Share Capital

Fee applicable

Less than 1,00,000

Rupees 200

1,00,000 to 4,99,999

Rupees 300

5,00,000 to 24,99,999

Rupees 400

25,00,000 to 99,99,999

Rupees 500

1,00,00,000 or more

Rupees 600



Fee for filing e-Forms or documents in case of a company not have share capital – Rupees 200.

Additional Fees

Period of delays

All forms

Up to 30 days

2 times of normal fees

More than 30 days and up to 60 days

4 times of normal fees

More than 60 days and up to 90 days

6 times of normal fees

More than 90 days and up to 180 days

10 times of normal fees

More than 180 days

12 times of normal fees



Conclusion

The definition clarifies that if an individual does not hold any right or entitlement indirectly as per the above-mentioned clauses, then he should not be considered to be a significant beneficial owner. Therefore, as per this clarification, in order to be a SBO, a person must have an indirect right or entitlement and where the person has only direct holding, he shall not be termed as the SBO, where the owners are well disclosed to the company, the application of the said Rules will be of no use.

Further, the Companies who have Body corporate as its members having a shareholding of more than 10% are required to give the declaration of SBO in Form BEN 1, and the Company is required to file the same within 30 days of receipt.


Disclaimer

Law is a matter of interpretation and the Author has taken utmost care while drafting the article but it may occur that certain error creeps in. This article is for academic purposes and should not be treated as a piece of professional advice. The readers are advised to refer to the Bare Acts and Rules before making any judgment.

 

How can I help you?