Beneficial Interest Declaration: MGT-4, MGT-5 & MGT-6

Section 89(10) defines it as the right, held directly or indirectly through any contract or arrangement, to exercise any of the rights attached to a share or to receive or share in its dividend or other distribution. The definition was inserted in 2018 and also applies to Section 90.

MGT-4 is the registered owner’s declaration that someone else holds the beneficial interest (Rule 9(1)). MGT-5 is the beneficial owner’s declaration of that interest (Rule 9(2)). Both go to the company. MGT-6 is the company’s return to the Registrar reporting what it received (Rule 9(3)).

A person whose name is entered in the register of members but who holds the shares for someone else. The commonest case is a wholly owned subsidiary: a private company needs two members (Section 3(1)(b)), so the holding company keeps one share in a nominee’s name, as Section 187(1) allows.

No. Rule 9 requires them to be filed with the company, and the formats are addressed to the company. Only MGT-6 is filed with the Registrar, and both declarations go with it as mandatory attachments.

Yes. Section 89(2) applies to every person who holds or acquires a beneficial interest, and MGT-5 asks for a CIN where the beneficial owner is a company. A holding company that keeps one share of its subsidiary with a nominee files MGT-5 for that share.

No. The words “in duplicate” were omitted from Rule 9(1) and 9(2) by the Companies (Management and Administration) Amendment Rules, 2016, dated 23 September 2016. One signed copy of each is enough.

MGT-4 is due within 30 days from the date the registered owner’s name is entered in the register of members, and MGT-5 within 30 days after the beneficial interest is acquired. A change in the interest is declared by both within 30 days of the change (Section 89(3)).

From the date the company receives the declaration (Section 89(6), Rule 9(3)), not from the date of the arrangement. Record the receipt date when the signed MGT-4 or MGT-5 reaches the company; MGT-6 asks for it.

Yes. Every change in the beneficial interest, including a new nominee, brings fresh declarations under Section 89(3), and Section 89(6) requires a return for every declaration the company receives.

A director, manager, CEO, CFO or company secretary authorised by a board resolution, whose date is entered in the form. The officer signs with a Class 3 digital signature and gives a DIN, PAN or membership number, as the form asks.

No. The MGT-6 form notified on 15 July 2024 (G.S.R. 403(E)) has a declaration by the authorised officer and no certification section for a practising chartered accountant, company secretary or cost accountant.

On V3. MCA moved MGT-6 and BEN-2 to MCA21 Version 3.0 on 15 July 2024 (General Circular No. 04/2024, 4 July 2024). It is a web form filled online, under Company e-Filing on the MCA portal.

The normal filing fee in the Table of Fees, by nominal share capital: ₹200 below ₹1 lakh, ₹300 below ₹5 lakh, ₹400 below ₹25 lakh, ₹500 below ₹1 crore and ₹600 at ₹1 crore or more. MGT-4 and MGT-5 carry no fee because they are not filed with the Registrar.

The portal charges an additional fee of 2, 4, 6, 10 or 12 times the normal fee, depending on the delay (table in force from 1 July 2022). The company and each officer in default also face a penalty of ₹1,000 a day under Section 89(7), imposed by the adjudicating officer.

The person who fails to declare is liable to ₹50,000, plus ₹200 for each day after the first while the failure continues, up to ₹5 lakh (Section 89(5)).

Yes. Section 446B caps the penalty at half of the amount in the section, and at ₹2 lakh for the company and ₹1 lakh for an officer or other person, for a One Person Company, small company, DPIIT-recognised start-up or producer company.

Section 89(8) makes every right in those shares unenforceable by the beneficial owner and by anyone claiming through him. The company still pays the dividend to the registered member and is discharged (Section 89(9)).

If a penalty has been imposed and the same default recurs within three years of the order, Section 454A doubles the penalty for the second and later defaults.

Yes, for the share held by the nominee. The nominee files MGT-4, the holding company files MGT-5 and the subsidiary files MGT-6, each within 30 days. Plan them at incorporation: the 30 days for MGT-4 start when the nominee’s name is entered in the register of members.

No. MGT-6 reports a Section 89 declaration about shares held in another’s name. BEN-2 reports a significant beneficial owner under Section 90, an individual with 10% or more held at least partly through other entities. One arrangement can need both.

Not by itself. A beneficial interest declared under Section 89(2) counts as a direct holding (Explanation II to Rule 2(1)(h), SBO Rules), and an individual with only direct holdings is not an SBO. The individuals behind a corporate parent are tested separately under Section 90.

Yes, if they are up to date. G.S.R. 463(E) of 5 June 2015 says Sections 89 and 90 do not apply to a Government company, and G.S.R. 582(E) of 13 June 2017 limits this to a company not in default in filing its financial statements or annual return.

Rule 9 does not apply to a trust created to set up a mutual fund, a venture capital fund or another fund approved by SEBI (proviso to Rule 9(3), inserted on 24 July 2014).

Since the 2023 amendment, every company names a person responsible for giving the Registrar information on beneficial interest in its shares: the company secretary if required, else a KMP, else every director. The details go in the annual return; a change is filed in GNL-2.