This is going to be a mega exercise by the Ministry of Corporate Affairs to identify the Key owners of a company in view of the amendments made on 8th February 2019 to the Companies (Significant Beneficial Owners) Rules, 2018. The new law not only provides clearer definitions for determination of individuals or entity as the Significant Business Owner of a company but also lays down detailed and elaborate procedure for seeking a declaration from the SBO and to file a Return in Form BEN-2 to the ROC.
The disclosures to be made by the individuals or entities holding 10% or more shares or voting power in any company is very comprehensive in nature and encompasses holdings not only in a company but also in any other entity such as LLP, any other body corporate, HUF, Partnership Firm, Discretionary Trust, Charitable Trust, Revocable trust, Pooled Investment Vehicle (PIV), or any entity controlled by such PIV. The expectations are very high from this new legal reporting and are expected to bring transparency in the shareholding structure of a company and would help the government agencies to identify and prevent the Benami and Money Laundering activities. In case there is a default on the part of the SBO, wherein they are not providing the response or in case the response is inappropriate then the company concerned can approach NCLT for suitable directions, including the freezing of their rights in the company.
The ministry of corporate affairs amended the Companies (Significant Beneficial Owners) Rules, 2018 which has come in to effect from its date of publication in The Gazette of India on 8th February 2019. This very amendment has introduced a structured and detailed procedural framework, new reporting requirement for every company registered in India under the Companies Act, 2013 or any previous law.
In brief, every company has to identify persons holding more than 10% of shares or voting right in the company and obtain a declaration from them in Form Number BEN-1. These persons shall be known as Significant Business Owner. For the purpose of soliciting the declaration in form BEN-1, the company shall send a letter in Form Number BEN-4 to every Significant Business Owner of the company annexing a blank declaration form (BEN-1). The shareholder is obligated to return the declaration within 90 days of the applicability of this rule and in case of failure, the company should move an application before NCLT for appropriate action against the rights of the SBO.
Within 30 Days of declaration from the persons of Significant Business Owners, the Company has to file a Return to the ROC in the form Number BEN-2 through any of the duly authorised director, Manager, CEO or CFO or Company Secretary of the Company. The form BEN-2 is also required to be further certified by a practising professional who may be a Chartered Accountant, Company Secretary or a Cost Accountant in whole time practice.
Following are the activities which have to be performed by every company in order of preference, with their due dates.
| S.No | Activity | Time Line |
|---|---|---|
|
1. |
Identification of Significant Business Owner (SBO) |
Immediately |
|
2. |
Creation and Maintainance of Register of Beneficial Owners holding Significant Beneficial Interest in Form No – BEN-3 |
Immediately |
|
3. |
Intimation to every SBO in Form No BEN-4 |
Immediately |
|
4. |
Filing of Return to the Registrar of Companies in Respect of declaration under Section 90 in Form Number BEN-2 |
Within 30 Days of receipt of a declaration from SBO |
FAQ – Return filing by Company in BEN-2
Q1: What is e-form BEN-2?
The e-form BEN-2 is the prescribed form released by the ministry of corporate affairs vide notification dated 8th February 2019, wherein every company has to file a return to the ROC for following purposes
- For declaration of significant beneficial ownership under section 90
- For change in significant beneficial ownership
- For declaration of holding reporting company
Q2: What is the time limit for filing the eform BEN-2?
The return in e-form BEN-2 is a declaration by a company about the individuals or any other entity holding 10% or more shares in the company or voting rights. This return needs to be filed within 30 days of receiving the declaration by the SBO to the company. The SBO is mandated to file their declaration for the first time within 90 days from 8th Feb 2019.
Q3: Is there any government fee payable for filing the Form BEN-2?
The eform shall be paid with the normal filing fee to the ROC based on the capital of the company, please refer below the table of the filing fee
| Sl. No | Authorised Capital (INR) | INR |
|---|---|---|
| 1. | Less than 1,00,000 | 200 |
| 2. | 1,00,000 to 4,99,999 | 300 |
| 3. | 5,00,000 to 24,99,999 | 400 |
| 4. | 25,00,000 to 99,99,999 | 500 |
| 5. | 1,00,00,000 or more | 600 |
Q4: Can I file the Form BEN-2 even when I miss the deadline of 30 Days?
As per MCA, If a company does not file the BEN-2 Form with the stipulated time, the company can still file the return with additional government fee for delayed filing to the MCA.
Table of the additional fee as per rule
| Sl. No | Delay | Additional Fee as times of Normal filing fee |
|---|---|---|
| 1 | Delay up to 30 Days | 2 Times |
| 2 | More than 30 days and up to 60 days | 4 Times |
| 3 | More than 60 days and up to 90 days | 6 Times |
| 4 | More than 90 days and up to 180 days | 10 Times |
| 5 | More than 180 days | 12 Times |
Q5: What are the documents required for filing the eform BEN-2?
The only attachment which is prescribed to be annexed with the BEN-2 form is the declaration from the SBO in BEN-1 from each shareholder having 10% or more shares of voting rights.
Q6: What is the Meaning of SBO (Significance Beneficial Owner)
Any Person who holds following rights in a company is an SBO according to the provisions of Section 90 of the Companies Act, 2013
- 10% holding shares, or
- 10% voting Right by directly and indirectly, or
- right to receive 10% dividend of the total distribution of dividend on indirect holding, or
- together direct holding or significant influence or control.
Q7: What are the companies or other entities which are exempted from filing BEN-2?
- Section 125(5), Authority constituted by the central government.
- Holding reporting company, provided that the detail of such reporting company shall be reported in BEN-2
- Central Government/ State Government/ Local Government
- Reporting Company/ body corporate / any entity controlled by the Central Government/ State Government/ Local Government
- SEBI / RBI etc