Significant beneficial owner, in relation to a reporting company means an individual referred to in   sub -section (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:

(i) Holds indirectly, or together with any direct holdings, not less than ten percent of the shares;

(ii) Holds indirectly, or together with any direct holdings, not less than ten percent of the voting rights in the shares;

(iii) 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;

(iv) Has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct-holdings alone.

Significance of Direct & Indirect Holding

  • If an Individual does not hold any right or entitlement indirectly under sub- clauses (i), (ii) and (iii), he shall not be considered to be a significant beneficial owner.

     Except for clause (IV)

Has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone.

LET’S TAKE FEW EXAMPLES FOR BETTER UNDERSTANDING:

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3 Comments

  1. Mohitjain says:

    Dear Sir,

    As per my understanding treatment of partnership firm as exactly same as applies to LLP specified in notification issued by Ministry Of Corporate Affairs dated 08.02.2019.

    Suppose there is a partnership firm which is holding 10% or more in reporting company and the firm is constituted with 3 members which is holding 33.33% each.

    In such case we will take declaration in form BEN-1 from all 3 members and the company will report 3 SBO’s if form BEN-2 who becomes SBO through partnership firm.

    In second case which you have asked:

    If there is a company (Member Co.) holding 10% or more in reporting company and in that member company their is a partnership firm which is holding more than 50% shares in that member company. In such case we will take declaration in form BEN-1 from all the partners of the partnership firm irrespective of their holding in such partnership firm.

    IN THIS REPLY, I HAVE CONSIDERED PARTNERSHIP FIRM AS LLP SINCE PARTNERSHIP FIRM CANNOT HELD SHARES IN A COMPANY.

    Hope this reply will help you.

    Regards
    Mohit Jain

  2. K S KRISHNAN says:

    What about shares held by Partnership firm in the reporting company or shares held by partnership firm in another company which in turn holds shares in the reporting company. Can you explain how to determine SBO in such cases?

    1. Mohit jain says:

      Dear Sir,

      As per my understanding treatment of partnership is exactly same as applies to LLP specified in notification issued by MCA dated 08.02.2019.

      Suppose their is a partnership firm which is holding 10 % or more in reporting company and the firm is constituted with 3 members which are holding 33.33% each.
      In this case we will take Declaration in form BEN 1 from all 3 members and we report 3 SBO’s in form BEN 2 who becomes SBO through partnership firm.

      In Second case which u have asked:

      If their is a company (Member Co.) holding 10% or more in reporting co. and in that member co. their is a partnership firm which is holding more than 50% shares in that Member co.
      In such case we will take Declaration in form BEN-1 from all the partners of partnership firm irrespective of their holding in such partnership firm.

      Hope this reply will help you.

      Regards
      Mohit Jain

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