The MCA has incorporated a new Concept and reporting requirement on Significant Beneficial Owner.

As per revised section Section 90 of Companies Act, 2013 (‘the Act) vide the Companies (Amendment)
Act, 2017 and rules framed there against under the Companies (Significant Beneficial Owner) Rules,
2018 (‘the Rules’), which has now been notified on 13th June, 2018 and all corporates have to comply
with the same.

Section 90 had introduced concept of “Significant Beneficial Owner (‘SBO’)” and this has to be ultimate
natural persons after flattening the corporate structures as per detailed definition below. All SBO’s have to
give declarations in prescribed form BEN-1.

Important Terms under the Act and Rules :

Beneficial Interest (BI): Beneficial interest in a share includes, directly or indirectly, through any
contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other
person to;

(i) Exercise or cause to be exercised any or all of the rights attached to such share; or

(ii) Receive or participate in any dividend or other distribution in respect of such share.

Significant Beneficial Owner (SBO):

 Every individual,
 who acting alone or together,
 or through one or more persons or trust,
 including a trust and persons resident outside India,

holds ultimate beneficial interests of not less than 10%, in shares of the company or the right to exercise,
or the actual exercising of significant influence or control over the company.

Disclosure of Significant Beneficial Interest (SBI) under Section 90 of the Act

Section 90 is applicable to every individual Significant Beneficial Owners holding the SBI as defined
above. As per the Section 90 read with the Companies (SBO) Rules, 2018,

(1) SBO shall file a declaration in Form No. BEN-I to the company in which he holds the SBI as on
13.06.2018, within 90 days from the commencement date (i.e. by 12.09.2018) and within 30 days
in case of any change in the SBI.
(2) Every individual who acquires SBI after 13.06.2018, shall file a declaration in Form No. BEN-I to
the company within 30 days of acquiring the SBI or in case of any change in such ownership.
(3) Every company shall file a return of SBO of the company and the changes therein in Form No. BEN-
2 with the Registrar (ROC) within a period of 30 days from the date of receipt of declaration by it.
(4) Every company shall maintain a register of interest declared by individuals and changes therein in
Form No. BEN-3. The Register shall be open for inspection by any member of the company on
payment of fees not exceeding Rs. 50/- for not less than 2 hours during business hours on every
working day as the Board may decide.
 (5) The Company has the power to give notice in Form No. BEN-4 to any person, whether or not a
member, whom the company knows or has reasonable cause to believe –
i. to be a Significant Beneficial Owner of the company;
ii. to be having knowledge of the identity of a Significant Beneficial Owner or another person
likely to have such knowledge; or
iii. to have been a Significant Beneficial Owner of the company at any time during the 3 years
immediately preceding the date on which the notice is issued, and who is not registered as a
Significant Beneficial Owner with the company as required under this section.

(6) If any person fails to make a declaration, he shall be punishable with fine which shall not be less
than 1 lakh rupees but which may extend to 10 lakh rupees. In case the failure is continuing one, a
further fine which may extend to 1 thousand rupees for every day after first during which failure
continues.

(7) If a company fails to maintain a Register or fails to file a return or denies inspection as per this
section, the company and every officer of the company who is in default shall be punishable
with the fine which shall not be less than 10 lakh rupees. In case the failure is continuing one, a
further fine which may extend to 1 thousand rupees for every day after first during which failure
continues.

(8) If any person willfully furnishes any false or incorrect information or suppresses any material
information of which he is aware in the declaration made under this section, he shall be liable to
action under section 447.

Notification and Format of BEN -1 are attach for your Reference .