On June 14, 2018 the Ministry of Corporate Affairs (MCA) issued the Companies (Significant Beneficial Owners) Rules, 2018 (SBO Rules).  The Rules, as name suggests, provide for a declaration by the Company to ROC about the Significant Beneficial Owner and compliance related to the same to enable Government authorities to keep a track of the actual holders of the ownership of the corporate entity.

In line with MCA’s Rules, SEBI on December 7, 2018 had prescribed the format of disclosure of the Significant Beneficial Ownership (SBO). While the declaration for SBO was due by every Company, MCA could not introduce the eForm BEN-2 under the SBO Rules for Companies to file and vide its circular dated September 6, 2018, MCA clarified that the time limit for filing the BEN-2 form would be 30 days from the date of deployment of BEN-2 e-form on the MCA-21 portal and no additional fee shall be levied if the same is filed within 30 days from the date of deployment of the said e-form. However, till date MCA is not able to issue eform BEN-2 and hence the countdown of 30 days is not yet started for Companies to file the declaration under the SBO Rules.

Further to the circular dated September 6, 2018, MCA issued Circular no. 8/2018 dated September 10, 2018, confirming BEN-1 form (Declaration by the beneficial owner who holds or acquires significant beneficial ownership in shares) will be revised and the revised timeline will be provided when the revised format form BEN-1 will be issued confirming NO IMMEDIATE ACTION COULD HAVE BEEN TAKEN BY COMPANIES ON SBO RULES till date.

Now to bring clarity and answering many pending questions, MCA notified the Companies (Significant Beneficial Owners) Amendment Rules, 2019 (Amendment Rules) on February 8, 2019. These amendments to the SBO Rule has given answers to a lot of the pondering questions that have been lurking in the past couple of months following the implementation of the SBO Rules.

Timeline as per Amendment Rules

Form Timeline Particulars
One Time Filing under SBO Rules
Form BEN-1 90 days from the date of notification in official gazette viz. on or before May 8, 2019 Ever Individual who is a significant beneficial owner needs to file form BEN -1 as per revised format to the Reporting Company.
eForm BEN-2 30 days from receipt of BEN-1 by the Company Upon receipt of declaration by the Company in form BEN-1, the Company is required to file eForm BEN-2 with ROC.
Regular Filings
Form BEN-1 30 days on subsequently becoming Significant Beneficial Owners * Every individual, who subsequently becomes a significant beneficial owner, or where his significant beneficial ownership undergoes any change shall file a declaration in Form No. BEN-1 to the reporting company, within thirty days of acquiring such significant beneficial ownership or any change therein.
eForm BEN-2 30 days from receipt of BEN-1 by the Company Upon receipt of declaration by the Company in form BEN-1, the Company is required to file eForm BEN-2 with ROC.

* Note:  In case of change in interest within 90 days of notification of the Rules, period of 30 days will commence from the expiry of above mentioned 90 days period.

Important changes introduced by SBO Amendment Rules

Many definitions like “Control”, “Majority Stake”, “Partnership Entity”, “Significant Beneficial Owner (SBO)”, “Significant influence” etc are modified with an intention to add more clarity in respect of various provisions of SBO Rules.

After considering various feedback and all Forms mentioned in SBO Rules are modified and following revised forms are issued with SBO Amendment Rules.:

Form under SBO Rules Purpose and Details
Form BEN 1 Declaration by the beneficial owner who holds or acquires significant beneficial ownership in shares
eForm BEN 2 Return to the Registrar in respect of declaration under section 90
Form BEN 3 Register of beneficial owners holding significant beneficial interest
Form BEN 4 Notice seeking information about significant beneficial owners

Non-applicability of Rules:

The non-applicability net has been made clearer and more specific and wider considering the difficulties in determining the SBO in various situations. Now, the SBO Rules shall not be made applicable to the extent the share of the reporting company is held by,-

(a) the authority constituted under sub-section (5) of section 125 of the Act;

(b) its holding reporting company:

Provided that the details of such holding reporting company shall be reported in Form No. BEN-2.

(c) the Central Government, State Government or any local Authority;

(d)    (i) a reporting company, or

(ii) a body corporate, or

(iii) an entity,

controlled by the Central Government or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments;

(e) Securities and Exchange Board of India registered Investment Vehicles such as mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs), Infrastructure Investment Trust (InVITs) regulated by SEBI

(f) Investment Vehicles regulated by RBI, or IRDA, or Pension Fund Regulatory and Development Authority.

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Company: JMJA & Associates LLP
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14 Comments

  1. Amit says:

    Hello Jigar,
    My company is fully owned by US based company, but i am unable to find our that my company’s holding company has any individual who has 10% or more stake in holding company.
    what i can do in this case? because holding company has further holdings by other US based companies and its very difficult to find out individuals behind it.
    Please suggest..

    1. jigar.shah1 says:

      Unfortunately there is no extension in BEN-1. So it has to be within 90 days from the date of notification in official gazette viz. on or before May 8, 2019.

  2. Johnson Singh says:

    Dear Sir,
    Thanks for sharing the valuable information.
    We have a private limited company me and my father are the directors of the company having share of 60%:40%.
    Do we need to file Ben 2 as we both are directors? Please suggest.

    1. jigar.shah1 says:

      BEN Filing is required only in case of Non Individual holding. Since you both are individual and holding shares in Company, BEN 1, BEN 2 etc is not applicable in your case.

  3. CA Pankaj Torne says:

    Hi Jigar,

    Ours is PVT limited company and 2 Directors are the dominant pramotor holding more than 10%.
    And Huf(Director) holding more than 10%. So is it applicable in our case.

  4. Nikunj agarwal says:

    Mine is a pvt ltd company. The are distributed within the family member. Do i need to file ben-1 for the said member.
    If yes then
    What if member dont furnish the required document within stipulated time.

    1. jigar.shah1 says:

      It is required only if your Company has non individual shareholders. If all are individual holding shares, SBO rules are not applicable.

  5. ACS Sonal Ratnawat says:

    Hello,

    My company is a SME listed entity having 13 group company, and all 13 group companies shareholders are its directors and there relatives only do I need to do filing under SBO rules for all the companies???

  6. Prerna says:

    Hi jigar ,
    My Company is a Private Limited Company and its shareholders are its directors and there relatives only do I need to do filing under SBO rules

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