Analysis of Significant Beneficial Ownership Rules, 2019

SIGNIFICANT BENEFICIAL OWNERSHIP RULES, 2019

WHO ISASIGNIFICANT BENEFICIAL OWNER (SBO)?

Means an individual as per Sec 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 ten per cent of the shares
• holds indirectly, or together with any direct holdings, not less than ten per cent of the voting rights in the shares
• 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 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

MEANING OF MAJORITY STAKE

• holds > one-half of the equity share capital in the body corporate
• holds > one-half of voting rights in the body corporate
• right to receive or participate > one-half of the distributable dividend or any other distribution by the body corporate

MEANING OF PERSON ACTING TOGETHER

If any individual(s) :

• acting through any person or trust
• act with common intent or purpose of exercising any rights or entitlements
• exercising control or significant influence over a reporting company pursuant to an agreement or understanding
• formal or informal
• such individual(s) acting through person or trust shall be deemed to be acting together.

MEANING OF SIGNIFICANT INFLUENCE

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.

MEANING OF DIRECT HOLDING BY SBO

On satisfaction of any one of the criteria:

• An individual who hold shares in the reporting company representing such right or entitlement in the name of the individual.
• An individual holds or acquires beneficial interest in the share of the reporting company and has made a declaration in this regard to the reporting company

MEANING OF INDIRECT HOLDING BY SBO

If the individual satisfies any of the following criteria in respect of a member of the reporting company:

• It is the duty of the reporting company to identify the individual who is the significant beneficial owner in relation to that reporting company and cause such individual to make a declaration in Form BEN-1.
• Where the member is other than individual holding not less than 10% of its shares or voting rights or right to receive or participate in the dividend or any other distribution payable in a financial year, the reporting company shall give notice to the member for information in form BEN-4.

DUE DATE FOR FILING

*Member (other than individual) holding not less than 10% shares or voting rights or right to receive/participate in dividend or any other distribution payable in a financial year.

Where an individual becomes SBO or any change occurs in ownership within 90 days of commencement of these rules, it shall be deemed that the change has occurred or individual has become SBO on the expiry of the 90 days from the commencement of these rules and 30 days shall be calculated accordingly.

NON-APPLICABILITY

• Authority under 125(5) of Companies Act: Investor and Protection Fund.
• Holding reporting company of the reporting company (provided details of the holding reporting company shall be reported in form BEN-2)
• The Central Government, State Government or any local authority.
• Entity, reporting company, body corporate controlled by the Central or State Government or partly by Central Government or partly by one or more State Governments.
• Investment Vehicles regulated by IRDA or RBI or Pension Fund Regulatory and Development Authority
• Investment Vehicles registered with SEBI