Companies (Significant Beneficial Owners) Amendment Rules, 2019 was notified by MCA vide Notification Dated 8th February 2019 which are Subject to Provisions of Section 90 of Companies Act, 2013 and Section 469(1),(2) Companies Act, 2013.

Article explains the following-

  • Meaning of Significant Beneficial Owner (SBO)
  • Who will be SBO in various Cases?
  • Duty of the Reporting Company
  • Declaration of Significant Beneficial Ownership
  • Format of Form BEN-1
  • Format of Form BEN-4
  • Return of significant beneficial owners in shares
  • Non Applicability of SBO Rules.

Companies (Significant Beneficial Owners) Amendment Rules, 2019.Companies (Significant Beneficial Owners) Amendment Rules, 2019

*Note-For the purpose of this clause, if an individual does not hold any right or entitlement indirectly under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial owner.

Who will be SBO in various Cases?

Who will be SBO in various Cases

Who will be SBO in various Cases 1

Who will be SBO in various Cases 2

Who will be SBO in various Cases 3

Explanation – Where an individual becomes a significant beneficial owner, or where his significant beneficial Ownership undergoes any change, within ninety days of the commencement of the Companies (Significant Beneficial Owners) Amendment Rules, 2019, it shall be deemed that such individual became the significant beneficial owner or any change therein happened on the date of expiry of ninety days from the date of commencement of said rules, and the period of thirty days for filing will be reckoned accordingly.

Format of Form BEN-1 & BEN-4

Format of Form BEN-1 & BEN-4 significant beneficial

Download PPT on Companies (Significant Beneficial Owners) Rules

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16 Comments

  1. Vibha says:

    Mr. X holds 88% shares in C Ltd. which holds 73% shares in B Ltd. which holds 17% in A Ltd. (Reporting Company). So Mr. X is SBO of A Ltd. ? correct? but what should be the shareholding to be written in Form BEN-1 of Mr.X in A Ltd.?

  2. richa says:

    SIr, my reporting company has Company as shareholder with 99%non voting rights. say co A, now this Company A has 2 individual shareholders holding 50% shares in A Ltd.
    These 2 shareholders are also holding 0.5% each in reporting Company directly,
    Am I right in interperatrating that since No majority holder in A ltd (50% each ) so No SBO reporting by the reporting Company. pl. confirm,

  3. NKR says:

    For example: There is a A Ltd who required to file BEN-2 (Reporting Company) and in A ltd a Body Corporate (B Ltd) hold let say 10% and in B Ltd a body corporate (C Ltd) hold 55% i.e Ultimate Holding Company and in C ltd an Individual Mr. X hold majority stake i.e more than 50% let say 60% then in such case, Will Mr. X will be the Significant Beneficial owner in A Ltd?
    QUERY:-
    My doubt is we know that in above example there is a indirect holding by Mr. X in A ltd, but the condition of HOLDING INDIRECTLY NOT LESS THAN 10% is fulfilled?
    As in above case if we multiply the shareholding that Mr.X is indirectly holding then we get 3.3% (60% x 55% x 10%). (Mr. X’s shareholding in C ltd x C ltd holding in B ltd x B ltd holding in A ltd)
    Please correct me if Im wrong because Im facing this issue.
    Thank you,

  4. Anita says:

    1. Mr. A holds 90% shares in a Company and Mr. A HUF holds 5% shares and other members hold 5%.

    a)Since HUF itself does not hold 10%, do we need to ascertain SBO or b)do we need to check both direct and indirect holding of Mr. A along with Mr. A HUF. In such a case, the total holding is 95%.

    2. ABC limited is a shareholder of a reporting company. Mr. A holds 2% shares in the company and XYZ Limited holds 8% shares . Mr A hold 90% shares in XYZ Limited.

    a)Since XYZ itself does not hold 10% shares in the company, do we still have to find SBO.b) Do we have to consider direct and indirect holding here ie 2% +8% and then find SBO.

  5. CA Sangita Tailor says:

    We are facing some problem while filing BEN 2. Please kindly reply to the query as soon as possible:

    One of our company is having a body corporate as its member and then that member company is again having a body corporate as its member which is holding the majority stake. So now who will beconsidered as the SBO in this case.

    1. Trupti Ranjan says:

      First thing… you have to ensure that Indian Company must have more then 2 layer of Subsidiaries.

      Now coming to your query…. you have to identify the ultimate owner [Natural Person] of the Company

    2. CS Vikram Sirohi says:

      first of all please read carefully the definition of “Significant Beneficial Owner” and ” Majority Stake”.
      Significant Beneficial Owner means an Individual who Indirectly or together with direct holds not less than 10 % of Shares or 10% Voting rights or 10% of Distributable profit in a financial year or who have significant influence or control.

      Majority stake means who hold more than 50% of shares or 50% of voting rights or 50% of Distributable profits.

      For example: There is a A Ltd who required to file BEN-2 (Reporting Company) and in A ltd a Body Corporate (B Ltd) hold let say 10% and in B Ltd a body corporate (C Ltd) hold 55% i.e Ultimate Holding Company and in C ltd an Individual Mr. X hold majority stake i.e more than 50% let say 60% then in such case Mr. X will be the Significant Beneficial owner in A Ltd.

      1. NKR says:

        Let me thank you, sir, first. My doubt is we know that in your above example there is a indirect holding by Mr. X in A ltd, but the condition of HOLDING INDIRECTLY NOT LESS THAN 10% is fulfilled?
        As in your case if we multiply the shareholding that Mr.X is indirectly holding then we get 3.3% (60% x 55% x 10%). (Mr. X’s shareholding in C ltd x C ltd holding in B ltd x B ltd holding in A ltd)
        Please correct me if Im wrong because Im facing this issue.
        Thank you,

        1. CS Vikram Sirohi says:

          No in such case Mr. X shall not be the “Significant beneficial owner” of A Ltd. because as per definition of Significant Beneficial Owner. in Case if in a company any other Company is member then in such case the significant beneficial shall be the Individual person who hold Majority stake in the member company or in the ultimate holding company of the Member company but in this example C ltd is not the holding Company of B ltd hence the Chain is breaking.

      2. Mahendra says:

        Sir,
        As per your example: There is a A Ltd who required to file BEN-2 (Reporting Company) and in A ltd a Body Corporate (B Ltd) hold let say 10% and in B Ltd a body corporate (C Ltd) hold 55% i.e Ultimate Holding Company and in C ltd an Individual Mr. X hold majority stake i.e more than 50% let say 60% then in such case Mr. X will be the Significant Beneficial owner in A Ltd.
        But if we change this as :
        In B Ltd, a body corporate (C Ltd) hold 25% and in C ltd an Individual Mr. X hold majority stake i.e more than 50% let say 60% then in such case will Mr. X be the Significant Beneficial owner in A Ltd.?

        1. CS Vikram Sirohi says:

          No in such case Mr. X shall not be the “Significant beneficial owner” of A Ltd. because as per definition of Significant Beneficial Owner. in Case if in a company any other Company is member then in such case the significant beneficial shall be the Individual person who hold Majority stake in the member company or in the ultimate holding company of the Member company but in this example C ltd is not the holding Company of B ltd hence the Chain is breaking.

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