As per Section 90 of the Act 2013, every significant beneficial owner is required to disclose the nature of his/her interest and other particulars within the prescribed period of time to the Company, and same will be inform to the Registrar of Companies. In the said connection, MCA has issue Companies (Significant Beneficial Owners) Rules, 2018, which deals with identification and reporting in connection to SBO.
Section 90 of the Act stated that 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, of not less than twenty-five per cent. 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, over the company (herein referred to as “significant beneficial owner”), 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.
Further Rule 2(h) of Companies (Significant Beneficial Owners) Rules, 2018 stated that who is 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 ten per cent. of the shares;
(ii) holds indirectly, or together with any direct holdings, not less than ten per cent. of the voting rights in the shares;
(iii) has right to receive or participate in not less than ten per cent. of the total distributable dividend, or any other distribution, in a financial year indirect holding 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.
Transaction that Considered Significant Beneficial Owner along with Illustration
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: –
Illustration 1. where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than limited liability partnership, and the individual, –
(a) holds majority stake in that member
| Holding > 50% in M/s. XXY Limited | Holding Interest in DFG Limited | |||
| Mr. ABD | ⇒ | M/s. XXY limited | ⇒ | M/s. DFG limited |
| SBO | Member of M/S. DFG Limited | Reporting Company |
(b) holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member
| Hold Majority Stake | Holding Interest in DFG Limited | |||
| M/s. ADC Limited | ⇒ | M/s. XXY limited | ⇒ | M/s. DFG limited |
| Ultimate Holding Company | Member of M/S. DFG Limited | Reporting Company |
⇑
| Mr. MNB |
SBO
Illustration 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
| Karta | Holding Interest in DFG Limited | |||
| Mr. ASD | ⇒ | DEC HUF | ⇒ | M/s. DFG limited |
| SBO | Karta of HUF | Reporting Company |
Illustration 3. where the member of the reporting company is a partnership entity (through itself or a partner), and the individual, –
(a) is a partner
Both Mr. ASD and Mr. DSA will considered SBO for the above transection.
(b) holds majority stake in the body corporate which is a partner of the partnership entity
SBO
Both Mr. ASD and Mr. DSA will considered SBO for the above transection.
(C) holds majority stake in the ultimate holding company of the body corporate which is a partner of the partnership entity
Both Mr. ASD and Mr. DSA will considered SBO for the above transection
Illustration 4. where the member of the reporting company is a trust (through trustee), and the individual, –
(a) is a trustee in case of a discretionary trust or a charitable trust;
(b) is a beneficiary in case of a specific trust;
(c) is the author or settlor in case of a revocable trust.
Mr. VBN, Mr. NBVT & Mr. KKL will considered SBO for the above transection
Illustration 5. where the member of the reporting company is, –
(a) a pooled investment vehicle; or
(b) 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, –
(A) is a general partner; or
(B) is an investment manager; or
(C) is a Chief Executive Officer where the investment manager of such pooled vehicle is a body corporate or a partnership entity.
Mr. MNB will considered SBO for the above transection.
Article is based on the interpretation of Author and may be change the interpretation of the Section.
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