Section 89 of the Companies Act, 2013 read with Rule 9 of the Companies (Management and Administration) Rules, 2014 governs declaration of beneficial interest in shares where the registered owner and beneficial owner are different persons. The registered owner who does not hold beneficial interest must file Form MGT-4 with the company within 30 days, while the beneficial owner must file Form MGT-5 within 30 days of acquiring or changing such interest. Upon receipt, the company is required to file Form MGT-6 with the Registrar of Companies within 30 days. This compliance commonly arises in nominee arrangements, wholly owned subsidiaries, trust structures, pledges, and changes in beneficial ownership. Non-compliance attracts penalties on both individuals and the company, including monetary fines for continuing defaults. Section 89 is distinct from Significant Beneficial Ownership under Section 90. Proper documentation, timely filings, and maintenance of registers are essential to avoid penalties and ensure statutory transparency in shareholding structures.
DECLARATION OF BENEFICIAL INTEREST UNDER SECTION 89 OF THE COMPANIES ACT, 2013
LEGAL FRAMEWORK
The compliance mechanism operates as follows:
| Person | Form | Filed With | Timeline |
| Registered Owner (who does not hold beneficial interest) | MGT-4 | Company | Within 30 Days |
| Beneficial Owner (who holds beneficial interest but not registered holder) | MGT-5 | Company | Within 30 Days |
| Company (on receipt of declaration) | MGT-6 | ROC | Within 30 Days |
FORM MGT-4
Declaration by Registered Owner of shares
(Section 89(1))
Form MGT-4 is required where:
- A person’s name is entered in the Register of Members as shareholder
- BUT he/she does not hold the beneficial interest in those shares
In such case, the registered owner must declare the details of the beneficial owner to the company.
Filing Timeline for MGT-4
Within 30 days from the date on which:
- Name is entered in the register, OR
- Any change in beneficial interest occurs.
FORM MGT-5
Declaration by Beneficial Owner
(Section 89(2) & (3))
Form MGT-5 is required where:
- A person holds or acquires beneficial interest in shares
- BUT his/her name is not entered in the Register of Members
In such case, The beneficial owner must declare the interest to the company.
Filing Timeline for MGT-5
Within 30 days of:
- Acquiring beneficial interest, OR
- Any change in such beneficial interest.
FORM MGT-6
Return to Registrar by Company
(Section 89(6))
Once the company receives MGT-4 and/or MGT-5:
The company must file Form MGT-6 with the Registrar of Companies.
Filing Timeline for MGT-6
Within 30 days from the date of receipt of MGT-4 / MGT-5.
PRACTICAL COMPLIANCE FLOW
1. Beneficial structure created
2. Registered Owner files MGT-4→ to Company → Within 30 days
3. Beneficial Owner files MGT-5→ to Company → Within 30 days
4. Company files MGT-6→ to ROC → Within 30 days
WHEN IS THIS COMMONLY REQUIRED?
- Incorporation of Wholly Owned Subsidiary (nominee shareholders)
- Trust structures
- Pledge / security arrangements
- Investment holding structures
- Change in beneficial ownership
- Transfer of beneficial interest
PENALTY FOR NON-COMPLIANCE
- Under Section 89(5):
If any person fails to make declaration:
- Penalty of ₹50,000
- Continuing default: ₹200 per day, subject to a maximum of five lakh rupees.
Under Section 89(7):
- If any Company fails to file declaration:
- Company and Every Officer in default – Penalty of ₹1,000 per day
- For Every Officer in default – subject to a maximum of Two lakh rupees.
- For Company – subject to a maximum of Five lakh rupees
IMPORTANT DISTINCTION
Section 89 deals with beneficial ownership in shares.
It is different from:
- Significant Beneficial Owner (SBO) under Section 90
- PAS-6 Reconciliation
- BEN-1 / BEN-2 filings
Professionals must carefully examine whether Section 89 or Section 90 applies.
BEST PRACTICE RECOMMENDATIONS
- Obtain MGT-4and MGT-5 at the time of incorporation (if nominee structure exists)
- Maintain proper register of beneficial interest
- File MGT-6within statutory timeline
- Keep documentary proof (trust deed / agreement / board resolution etc.)
- Ensure alignment with shareholding pattern
ATTACHMENTS
For reference:
- Word Format of Form MGT-4
- Word Format of Form MGT-5
(Attached herewith)
| Form No. MGT-4 | |||||||||
| Declaration by the registered owner of shares who does not hold the beneficial interest in such shares | |||||||||
| [Pursuant to section 89(1) of the Companies Act, 2013 and rule 9(1) of the Companies (Management and Administration) Rules, 2014] | |||||||||
| To,
Name of the company Registered office address: |
|||||||||
| 1. Particulars of the Registered owner of shares: | |||||||||
| (i) Name: | |||||||||
| (ii) Father’s / Mother’s / Spouse’s name: | |||||||||
| (iii) Occupation: | |||||||||
| (iv)Whether citizen of India: Yes / No | |||||||||
| (v)Nationality: | |||||||||
| (vi)Date of Birth: | |||||||||
| (vii)Gender: Male / Female | |||||||||
| (viii) PAN No.: | |||||||||
| (ix) Proof of Identity: | |||||||||
| · For Indian Nationals: | |||||||||
| (Tick any of the following): | |||||||||
| • Income-tax permanent account number | |||||||||
| • Voter’s identity card number | |||||||||
| • Passport number | |||||||||
| • Driving License | |||||||||
| • Unique Identification Number (UIN) | |||||||||
| · For Foreign nationals and Non-Resident Indians: | |||||||||
| • Passport | |||||||||
| • Others | |||||||||
| (x) Permanent Residential Address: | |||||||||
| ISO Country Code: | Country: | ||||||||
| Phone: | Mobile: | ||||||||
| Fax: | Email ID: | ||||||||
| (xi) Whether present residential address is same as the permanent residential address : Yes / No | |||||||||
| If no, present residential address | |||||||||
| ISO Country Code: | Country: | ||||||||
| Phone: | Mobile: | ||||||||
| Fax: | Email ID: | ||||||||
| 2. Particulars of the shares in respect of which declaration is being made by the registered owner: | |||||||||
| i) Class of shares: | |||||||||
| ii) Number of shares: | |||||||||
| iii) Distinctive numbers: From _______ To _________ | |||||||||
| iv) Certificate No.: | |||||||||
| v) Folio No.: | |||||||||
| vi) Nominal value of shares: | |||||||||
| vii) Paid-up value of shares: | |||||||||
| 3. Declaration: | |||||||||
| In pursuance of sub-section (1) of section 89 of the Companies Act, 2013, I ________________________ hereby declare that the person(s) named below hold(s) the beneficial interest in the above-mentioned shares registered in my name in the register of members of the company: | |||||||||
| Sl. No. | Name of the beneficial Owner (s) | Address and Email ID | Date of birth/
Age |
Father’s/ Spouse’s Name | Occupation | Nationality | PAN/ UIN/ CIN (in case of company) | Passport No. (in case of foreign national) | Distinctive No., if applicable |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| 4. Details of the beneficial interest: | |||||||||
| i) Nature of the beneficial interest: | |||||||||
| ii) Date of creation of the beneficial interest: | |||||||||
| iii) Reasons for not registering shares in the name of the beneficial owner(s): | |||||||||
| iv) Particulars of the instrument/ document, if any, showing the creation of such beneficial interest: | |||||||||
| 5. Particulars of change in beneficial interest: | |||||||||
| i) Date of change: | |||||||||
| ii) Nature of the change in the beneficial interest: | |||||||||
| iii) Brief particulars of such change: | |||||||||
| iv) Reason for such change: | |||||||||
| v) Particulars of the instrument/ document, if any, showing the change in such beneficial interest: | |||||||||
| Date: | |||||||||
| Place: | |||||||||
| Signature of the registered owner | |||||||||
| Enclosures: | |||||||||
| (a) Proof of identity of the registered owner and beneficial owner | |||||||||
| (b) Instrument/ document under which the beneficial interest is created/ transferred/ changed. | |||||||||
–
| Form No. MGT-5 | |||||||||
| Declaration by the beneficial owner who holds or acquires beneficial interest in shares but whose name is not entered in the register of members | |||||||||
| [Pursuant to sub-section (2) and (3) of section 89 of the Companies Act, 2013 and rule 9(2) of the Companies (Management and Administration) Rules, 2014] | |||||||||
| To,
Name of the company Registered office address: |
|||||||||
| 1. Particulars of the shares in which beneficial interest is held by the person making declaration: | |||||||||
| (i) Class of shares: | |||||||||
| (ii) Number of shares: | |||||||||
| (iii) Distinctive numbers: From _______ To _________ | |||||||||
| (iv) Certificate No.: | |||||||||
| (v) Folio No.: | |||||||||
| (vi) Nominal value of shares: | |||||||||
| (vii) Paid up value of shares: | |||||||||
| 2. Particulars of the beneficial owner | |||||||||
| Sl. No. | Name of the beneficial Owner (s) | Address and Email ID | Date of birth/ Age | Father’s/ Mother’s/ Spouse’s
name |
Occupation | Nationality | PAN/ UIN/ CIN (in case of company) | Passport No. (in case of foreign national) | |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| 3. Declaration: | |||||||||
| In pursuance of sub-section (2) of section 89 of the Companies Act, 2013, I ____________hereby declare that I hold / have acquired the beneficial interest in the above-mentioned shares of the company which are registered in the name of the person whose particulars are furnished below. | |||||||||
| 4. Particulars of the registered owner: | |||||||||
| Sl. No. | Name of the registered owner | Address and Email ID | Date of birth/ Age | Father’s/ Spouse’s
name |
Occupation | Nationality | PAN/ UIN/ CIN (in case of company) | Passport No. (in case of foreign national) | |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| 5. Details of the beneficial interest: | |||||||||
| i) Date of creation / acquisition of beneficial interest: | |||||||||
| ii) Mode of acquisition of beneficial interest: Allotment / Transfer / others, specify | |||||||||
| iii) Nature of the beneficial interest: | |||||||||
| iv) Reasons for not registering shares in my name: | |||||||||
| v) Particulars of the instrument/ document, if any, showing the creation of such beneficial interest: | |||||||||
| 6. Particulars of the person from whom the beneficial interest is acquired, if applicable: | |||||||||
| i) Name of the transferor of beneficial interest: | |||||||||
| ii) Whether shares were registered in his name: (If not, whether any declaration under sub-section (2) of section 89 was filed by him to the company. If so, date of such declaration) | |||||||||
| iii) Particulars of the instrument/ document, if any, showing the transfer of such beneficial interest: | |||||||||
| 7. Particulars of change in beneficial interest: | |||||||||
| i) Date of change: | |||||||||
| ii) Nature of the change in the beneficial interest: | |||||||||
| iii) Brief particulars of such change: | |||||||||
| iv) Reason for such change: | |||||||||
| v) Particulars of the instrument/ document, if any, showing the change in such beneficial interest: | |||||||||
| Date: | |||||||||
| Place: | |||||||||
| Signature of the beneficial owner | |||||||||
| CERTIFICATE | |||||||||
| I hereby certify that the beneficial interest in the shares mentioned above has been transferred by me on _____________
Signature of the person who has transferred the beneficial interest in the shares |
|||||||||
| Date: | |||||||||
| Place: | |||||||||
| Enclosures: | |||||||||
| 1. Proof of identity of the registered owner and beneficial owner | |||||||||
| 2. Instrument/ document under which the beneficial interest is created/ transferred/ changed. | |||||||||
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