The Ministry of Corporate Affairs has notified the Companies (Significant Beneficial Owners) Rules, 2018 (“Rules”) effective 14th June, 2018.
The Rules have been issued under Section 90 read with Section 469(1) of the Companies Act, 2013.
Background:
Section 90 (Investigation of Beneficial Ownership of shares in certain cases) of the Companies Act, 2013 (“Act”) was notified on 1 April, 2014.
As per Section 90 of the Act, every individual who is acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five percent or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control over the company, will be required to provide a declaration to such company specifying the nature of his interest and other particulars regarding the shareholding.
Any change in particulars of shareholding will also be required to be intimated to the Registrar of Companies by the respective companies after receiving such intimations in the form of declarations filed by such shareholders to respective companies.
The Ministry has framed Rules for meeting the requirements under Section 90 of the Act. The Rules state that “significant beneficial owner” means an individual referred to in Section 90 holding ultimate beneficial interest of not less than ten percent and whose name is not entered in the register of members of a company as the holder of such shares.
Non-Applicability:
These Rules are not made applicable to the holding of shares of companies / body corporates, in case of pooled investment vehicles, investment funds such as Mutual Funds, Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) regulated under SEBI Act.
Highlights of the Rules:
- Every significant beneficial owner as on the date of commencement of the Rules, is mandated to file a declaration in Form BEN-1 to the respective companies within 90 days from the date of commencement of the Rules. If there is any change in significant beneficial ownership, such change is required to be intimated to the respective companies in Form BEN-1 within 30 days from the date such change
- Every Individual, who becomes significant beneficial owner after the commencement of the Rules shall file declaration to the company through Form BEN-1 within 30 days from the date of acquiring such significant beneficial ownership.
- Respective companies, after receiving declarations from the significant beneficial owners in Form BEN-1, shall file a return in Form BEN-2 within 30 days from receiving of such declarations with the Registrar of Companies (ROC) along with fees as per the Companies (Registration Offices and Fees) Rules, 2014.
- Companies are required to maintain a registrar of significant beneficial owner in Form BEN-3.
Please refer to the hyperlink below for further details.
Source: Ministry of Corporate Affairs
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