PCS Raveena Sharma
Introduction
Registered Owner refers to a person whose name is entered in the register of members of the Company and thus known as the shareholder of the Company.
Beneficial Owner refers to the person who enjoys the right of ownership of the shares irrespective of the title.
Generally, registered owner and beneficial owner are one and the same person but in some cases they may be different i.e. there may be a case where the person whose name is entered in the register of members of a particular Company is different and the person who actually enjoys the right of ownership is different.
Example of the above provision:
One of the common example of this case is the “Holding Company and Wholly Owned Subsidiary Company”. The Holding Company is a Company which holds 100% shareholding of the other Company which is known as Wholly Owned Subsidiary of the Holding Company. In order to fulfill the requirement of the Act of minimum shareholder(s), the Holding Company is required to appoint one or more nominee(s) as the shareholder(s) of the Wholly Owned Subsidiary Company. The nominee(s) appointed by the Holding Company are the registered owner holds the shares of the Wholly Owned Subsidiary Company on its name for and on behalf of the Holding Company i.e. ultimate beneficiary of such shares is Holding Company.
Regulatory Provisions
Section-89: Declaration in respect of beneficial interest in any share:-
Section 89 of the Companies Act, 2013 deals with the Beneficial Owner and Registered Owner and their respective rights and duties as against Section 187C of the Companies Act, 1956.
Pursuant to the provisions of the Companies Act, 2013, both the registered owner and beneficial owner are required to intimate/declare to the Company about those shares which are actually held by the registered owner and in which beneficial owner holds the beneficial interest irrespective of its title along with their particulars and particulars of each other, nature of interest hold by the beneficial owner, in the prescribed form(s) which are Form MGT 4 for the Registered Owner and Form MGT 5 for the Beneficial Owner within 30 days from the effective original date or within 30 days of any change in the particulars or information declared. The Company is further required to file such declarations, after taking the note of the same, in Form MGT 6 within 30 days to the concerned Registrar of Companies.
In case of failure to intimate, either on the part of the respective owners to the Company or on the part of the Company to the concerned Registrar of Companies, respective owners, Company and officers in default of the Company shall be punishable with heavy fixed penalty or penalty on continuing day to day basis after fixed time. Apart of paying heavy penalty, another loss which shall be borne by the beneficial owner would be that he would no longer be able to enforce any right in relation to those share(s) in which he holds beneficial interest.
Section-90: Investigation of beneficial ownership of shares in certain cases:-
Section 90 of the Companies Act, 2013 deals with the Investigation of the beneficial owners and their particulars by the Central Government as against Section 187D of the Companies Act, 1956.
Pursuant to the provisions of the Companies Act, 2013, Central Government may, on its own motion, appoint a competent person, wherever it deems necessary, to conduct investigation of the beneficial owners and their particulars with regard to any share or class of shares and to present a report of the same to the Central Government.
Further, the provisions of Section 216, shall apply to such investigation as far as applicable as if the investigation was ordered under that section.
For your reference, provisions of Section 216 are produced herein below.
Section-216: Investigation of ownership of Company:-
Section 216 of the Companies Act, 2013 deals with the Investigation of the ownership of Company as against Section 247 of the Companies Act, 1956.
The Central Government may on its own motion whenever it deems necessary or on the order of the Tribunal, appoint an inspector to initiate an investigation of the Company and to produce its report for the purpose of determining true persons who are financially interested in the success or failure of the Company and who are able to control or influence the policy of the Company.
The Powers, rights and term of the appointment of the Inspector and scope of the investigation shall be defined by the Central Government.
Conclusion:
The first and the foremost purpose which it solves is the statutory requirement of minimum shareholders of the Company without actually diluting the rights and control of the major holders of the Company. Further, the declaration which is legally required, helps the management and shareholders of the Company to know about the persons who has actually invested in the shares of the Company and who may exercise indirect control in the decision making of the Company.
