Summary: Section 89 of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014 governs declarations relating to beneficial interest in shares. A person is treated as having beneficial interest where they enjoy benefits such as dividends, voting rights or gains from shares despite not being the registered owner in the company’s register of members. The procedure requires declarations from both the registered owner and beneficial owner. The registered owner is required to provide details of the beneficial owner, including the date and nature of the arrangement, through Form MGT-4, while the beneficial owner is required to declare details of the shares, nature of interest, registered owner and date of acquisition through Form MGT-5. The respective declarations are to be filed with the company within the prescribed 30-day timelines. Upon receiving the declarations, the company is required to convene a Board Meeting and approve the declarations received in MGT-4 and MGT-5, while authorising a director to file e-Form MGT-6 with the Registrar of Companies. The company must file MGT-6 along with the Board resolution and pay the prescribed fee under the Companies (Registration Offices and Fees) Rules, 2014, generally within 30 days of receiving the declarations. The procedure therefore involves identification of beneficial interest, filing of declarations by the registered and beneficial owners, Board approval and subsequent filing by the company with the ROC.
1. GOVERNING PROVISIONS OF THE COMPANIES ACT, 2013:
| Section 89 of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014 |
2. PROCEDURE:
| Sr. No | Steps | Timeline / Date |
|---|---|---|
| 1. | IDENTIFICATION OF BENEFICIAL INTEREST:
A person is said to hold a beneficial interest in shares if they enjoy the benefits (such as dividends, voting rights, or gains) from shares even though they are not the registered owner (i.e., their name is not on the company’s register of members). |
|
| 2. | FILING OF DECLARATION BY REGISTERED OWNER (FORM MGT- 4):
The registered owner shall declare the details of the beneficial owner, including the date and nature of the arrangement, and file Form MGT-4 with identity proof of registered owner and beneficial owner with the Company. |
within 30 days of entry in the register of members or any change in beneficial interest. |
| 3. | FILING OF DECLARATION BY BENEFICIAL OWNER (FORM MGT-5):
The beneficial owner shall declare the details of shares, nature of interest, particulars of the registered owner, and date of acquisition, and file Form MGT-5 with identity proof of registered owner and beneficial owner with the Company. |
within 30 days of acquiring or changing the beneficial interest in shares. |
| 4. | CONVENE BOARD MEETING AND PASS THE FOLLOWING RESOLUTIONS:
|
within 30 days from the date of receiving of declaration in MGT-4 / MGT-5. |
| 5. | FILING E-FORM MGT-6 WITH REGISTRAR OF COMPANIES (ROC) -:
The Company is required to file form MGT-6 along with the Board resolution with the ROC and pay fee as per the Companies (Registration Offices and Fees) Rules, 2014. |
within 30 days of receiving of declarations |
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**This document is for educational purposes only and does not constitute legal advice.**
Author : Ms. Monisha Agrawal, Manager at M/s Ronak Jhuthawat & Co, Practicing Company secretary Call: +91 98874 22212 | Email: [[email protected]](mailto:[email protected])
