The concept of Significant Beneficial Owner (BEN) has evolved significantly since its introduction in 2018. This article delves into the details of BEN and the recent amendments that have expanded and clarified this concept within the corporate world.

For better understanding the concept of BEN lets first discuss the meanings of some significant elements:

“reporting company” means a company incorporated under Companies Act 2013 or any other previous laws.

“significant beneficial owner” means an individual who acting alone or through more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, namely:

(i) holds indirectly or directly not less than ten percent, of the shares;

(ii) holds indirectly or directly not less than ten percent, of the voting rights in the shares;

(iii) has direct or indirect 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

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

The main definition for understand the concept of BEN is cleared as mentioned above, now let’s carry forward the understanding with the help of e-forms:

BEN-1: It is the duty of every company to find out the significant beneficial owner, and make that individual to file a declaration about its beneficial holding in BEN-1, within thirty days of acquiring such significant beneficial ownership or any change therein.

Format of Form No. BEN-1 – Declaration by the beneficial owner who holds or acquires significant beneficial
ownership in shares

Henceforth, it is apparently the liability of the company to find out the significant beneficial owner in the company, if the company turns out neglect to find the significant beneficial owner then the company shall face the outcomes.

BEN-2: Upon receipt of declaration in Form BEN-1, the reporting company shall file a return in E-Form No. BEN-2, within a period of thirty days from the date of receipt of such declaration

https://taxguru.in/company-law/companies-significant-beneficial-owners-second-amendment-rules-2019.html

BEN-3: The company shall maintain a register of significant beneficial owners in Form No. BEN-3.

Form no. BEN-3 – Register of beneficial owners holding significant beneficial interest

https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=MTA3OTA=&docCategory=Forms&type=open

BEN-4: Every reporting company shall in all cases where its member (other than an individual), holds not less than ten per cent of its;-

(a) shares, or

(b) voting rights, or

(c) right to receive or participate in the dividend or any other distribution payable in a financial year, give notice to such member, seeking information, in Form No. BEN-4.

Form no. BEN-4

Recent Amendment dated 27th October, 2023.

The recent amendment dated 27th October, 2023, introduces important changes to the Companies (Management and Administration) Rules, 2014, specifically in rule 9. These changes focus on designating individuals responsible for providing information about beneficial interests in shares of a company to the Registrar or authorized officers. Here’s an analysis of the key points in this amendment:

1. Designation Requirement: The amendment mandates that every company must designate a person responsible for furnishing and cooperating in providing information related to beneficial interests in the company’s shares to the Registrar or authorized officers.

2. Designated Persons: The rule specifies who can be designated as the responsible person:

(i) A company secretary, provided there is a requirement for such an appointment under the Act and relevant rules.

(ii) A key managerial personnel (KMP) other than the company secretary.

(iii) Every director, in cases where there is no company secretary or key managerial personnel.

3. Temporary Designation: In situations where a company has not yet designated a person, the rule outlines temporary deemed designations:

(i) The company secretary will be deemed as the designated person if required under the Act and rules.

(ii) If no company secretary has been appointed, every Managing Director or Manager will be deemed as the designated person.

(iii) In cases where there is no company secretary, Managing Director, or Manager, every director will be deemed as the designated person.

4. Annual Return: The amendment specifies that every company is required to provide details of the designated person in the annual return. This ensures transparency and compliance with the new rule.

In summary, this amendment emphasizes the importance of designating individuals within a company who will be responsible for providing information about beneficial interests in shares. It offers flexibility in designating different roles within the company, such as company secretaries, key managerial personnel, and directors. This requirement aims to enhance transparency and regulatory compliance in companies’ management and administration. Companies must ensure that they comply with these rules and designate the appropriate individuals as required.

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Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a piece of professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

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