The e-form BEN-2 is the prescribed form released by the ministry of corporate affairs vide notification dated 8th February 2019, wherein every company has to file a return to the ROC for following purposes

1. For declaration of significant beneficial ownership under section 90

2. For change in significant beneficial ownership

3. For declaration of holding reporting company

The return in e-form BEN-2 is a declaration by a company about the individuals or any other entity holding 10% or more shares in the company or voting rights. This return needs to be filed within 30 days of receiving the declaration by the SBO to the company. The SBO is mandated to file their declaration for the first time within 90 days from 8th Feb 2019.

Significant Beneficial Owner (SBO)

Every individual, who acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in a reporting company shall be deemed to be a significant beneficial owner (SBO):

  • 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 the right to receive or participate (by virtue of their indirect and/or direct holdings) in not less than 10% of the total distributable dividend or any other distribution; or
  • has the right to exercise, or actually exercises, significant influence or control (through their indirect holdings only) over the reporting company.

In addition, the New SBO Rules also lay down comprehensive criteria for the determination of an individual’s indirect holdings in the reporting company for the purpose of determining whether or not an individual is an SBO. For example, if the member of the reporting company is a company, the SBO is the individual who holds majority stake in that member or holds majority stake in the ultimate holding company of that member.

Reporting Process

Every company has to identify persons holding more than 10% of shares or voting right in the company and obtain a declaration from them in Form Number BEN-1. These persons shall be known as Significant Beneficial Owner.

For the purpose of soliciting the declaration in form BEN-1, the company shall send a letter in Form Number BEN-4 to every Significant Beneficial Owner of the company annexing a blank declaration form (BEN-1). The shareholder is obligated to return the declaration within 90 days of the applicability of this rule and in case of failure, the company should move an application before NCLT for appropriate action against the rights of the SBO.

Within 30 Days of declaration from the persons of Significant Beneficial Owners, the Company has to file a Return to the ROC in the form Number BEN-2 through any of the duly authorised director, Manager, CEO or CFO or Company Secretary of the Company. The form BEN-2 is also required to be further certified by a practising professional who may be a Chartered Accountant, Company Secretary or a Cost Accountant in whole time practice.

Timeline

Sl. No Activity Time Line
1. Identification of Significant Beneficial Owner (SBO) Immediately
2. Creation and Maintainance of Register of Beneficial Owners holding Significant Beneficial Interest in Form No – BEN-3 Immediately
3. Intimation to every SBO in Form No BEN-4 Immediately
4. Filing of Return to the Registrar of Companies in Respect of declaration under Section 90 in Form Number BEN-2 Within 30 Days of receipt of a declaration from SBO

Author Bio

Qualification: CS
Company: Valtech India Systems Private Limited
Location: BANGALORE, Karnataka, IN
Member Since: 09 Sep 2019 | Total Posts: 2
Two roads diverged in a wood – and I I took the one less travelled And that has made all the Difference - Robert Frost These words describe me and my outlook in Life. I'm a content writer, branding strategist, scriptwriter, and social media marketer and have worked for a number of companies View Full Profile

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2 Comments

  1. A*V says:

    Very helpful article. Crisp and complete.
    Helps a lot to very new Practicing Chartered Accountants like us. Just wanted to let the author know that we await other such insightful articles and would prompt the author to keep this up.

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