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Filing of Form No BEN-2 By Company to ROC to Declare Significant Business Owner (SBO)

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.

Table of Contents

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

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

  1. For declaration of significant beneficial ownership under section 90
  2. For change in significant beneficial ownership
  3. For declaration of holding reporting company
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.
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
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
 
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.

Any Person who holds following rights in a company is an SBO according to the provisions of Section 90 of the Companies Act, 2013

  1. 10% holding shares, or
  2. 10% voting Right by directly and indirectly, or
  3. right to receive 10% dividend of the total distribution of dividend on indirect holding, or
  4. together direct holding or significant influence or control.
  1. Section 125(5), Authority constituted by the central government.
  2. Holding reporting company, provided that the detail of such reporting company shall be reported in BEN-2
  3. Central Government/ State Government/ Local Government
  4. Reporting Company/ body corporate / any entity controlled by the Central Government/ State Government/ Local Government
  5. SEBI / RBI etc

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.
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6 thoughts on “Filing of Form No BEN-2 By Company to ROC to Declare Significant Business Owner (SBO)”

  1. Dear Sir,

    Kindly explain who is a significant beneficial owner. How these rules are going to affect a small companies Incorporated like MSMEs. They would need real guidance from you. Generally in small companies, the shareholders will be directors n they will be beneficial owners as well. Whether these rules applicable to them is the query to many small companies.

    The explanation given by you are of high end helpful to big corporates. Big companies anyway know what is expected out of these rules.

    1. What is the last date of ben 1 after extend date of ben 2 form
      And also suggest me to fill form ben 2 without any penalty

  2. sir i have a confusion at some places it is written that 10 % holding but many of places it is 25 % … guide me on this

  3. Sir, please clarify whether the SBO ( the person having more than 10% holding in a company) details are to be filed in BEN-2 form or SBO and the company which is holding more than 10% holding in SBO is required to give details in form BEN-2? Pleased clarify.

  4. HELLO SIR IF MY COMPANY IS SUBSIDIARY CO OF FOREIGN HOLDING COMPANY AND ITS HOLIDING IS 99.99% AND THE FOREIGN HOLDING CO IS REGISTERED AS A MEMBER IN REGISTER OF MEMBERS SO THAT I REQUIRED TO FILE FORM BEN-2?AND UNDER WHICH OPTION?

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