The Companies (Significant Beneficial Owners) Rules, 2018

In order to control various illegal activities like tax evasion, money laundering, benami transactions etc., vide notification published by the Ministry of Corporate Affairs on 13th June, 2018, the Central Government has introduced the Companies (Significant Beneficial Owners) Rules, 2018.

Meaning of Significant Beneficial Owner

Definition of the term ‘Significant Beneficial Owner’ is provided, under the newly introduced rule, under section 2 (e) and the same is hereunder explained in simple terms – Significant Beneficial Owner means an individual, acting alone or together or through one or more persons including trust or person resident outside India, whose name is not entered in the register of members and the individual is holding more than 10% in shares capital of a company or who exercises significant influence or control in the company through other means.

Declaration of Significant Beneficial Ownership In Shares

Rule 3 of the Companies (Significant Beneficial Owners) Rules, 2018 contains provisions regarding declaration of significant beneficial ownership and the same are described hereunder –

Cases wherein person is holding significant beneficial ownership before the introduction of the Companies (Significant Beneficial Owners) Rules, 2018 –

A declaration in FORM No. BEN-I is required to be filed by all the significant beneficial owner. The declaration is to be filed to the company in which the person is holding significant beneficial ownership. The said declaration should be filed within a period of ninety days from the date of commencement of the Companies (Significant Beneficial Owners) Rules, 2018. In case of any change in the declaration of significant beneficial ownership, the same needs to be declared within a period of thirty days.

Cases wherein person is holding significant beneficial ownership after the introduction of the Companies (Significant Beneficial Owners) Rules, 2018 –

A declaration in FORM No. BEN-I is to be submitted to the company within a period of thirty days in case the person has acquired significant beneficial ownership after the commencement of the Companies (Significant Beneficial Owners) Rules, 2018.

Register of Significant Beneficial Owners

The company is essentially required to maintain a register keeping therein records of significant beneficial owners. The register is required to be maintained in FORM No. BEN-3. The register so maintained can be inspected by the member of the company. Such an inspection can be done by the member during the business hours and on every working day. Member willing to inspect the register are required to pay specified fees as decided by the company, however, the fees cannot be more than fifty rupees for each inspection.

Return of Significant Beneficial Owner

As per rule 4 of the Companies (Significant Beneficial Owners) Rules, 2018, the company is required to file a return in FORM no. BEN-2 with the Registrar. The return is required to be filed within a period of thirty days from the date of receipt of the declaration. Fees, as prescribed by the Companies (Registration offices and fees) Rules, 2014, is payable along with the return.

Exemption From The Companies (Significant Beneficial Owners) Rules, 2018

As per rule 8 of the said rules, the Companies (Significant Beneficial Owners) Rules, 2018 are not applicable to the holding of shares of companies body corporates. The rules are even not applicable in case of pooled investment vehicles/investment funds such as Mutual Funds, Alternative Investment Funds, Real Estate Investment Trusts and Infrastructure Investment Trusts regulated under SEBI Act.

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Frequently Asked Questions

Common questions about Significant Beneficial Owners Rules, 2018.

The Companies (Significant Beneficial Owners) Rules, 2018 were introduced to control illegal activities like tax evasion, money laundering, and benami transactions by identifying the individuals who have significant beneficial ownership in companies.

A Significant Beneficial Owner is an individual who, acting alone or together with others, holds more than 10% of the share capital of a company or exercises significant influence or control in the company through other means, even if their name is not entered in the register of members.

Individuals who were Significant Beneficial Owners before the introduction of these rules were required to file a declaration in FORM No. BEN-1 to the respective company within 90 days from the commencement of the rules.

In case of any change in the declaration of Significant Beneficial Ownership, the same needs to be declared by the individual to the company within a period of 30 days.

Individuals who acquire Significant Beneficial Ownership after the introduction of these rules are required to submit a declaration in FORM No. BEN-1 to the company within 30 days of acquiring such ownership.

Companies are required to maintain a register of Significant Beneficial Owners in FORM No. BEN-3, which can be inspected by members of the company during business hours on payment of a fee not exceeding Rs. 50 per inspection.

Companies are required to file a return in FORM No. BEN-2 with the Registrar within 30 days of receiving the declaration from a Significant Beneficial Owner, along with the prescribed fees.

Yes, the rules are not applicable to the holding of shares by companies or body corporates, as well as certain pooled investment vehicles or investment funds regulated under the SEBI Act.

The article does not explicitly mention the consequences of non-compliance. However, as these rules are introduced to combat illegal activities, there may be penalties or legal actions for non-compliance.

Yes, the definition of a Significant Beneficial Owner includes individuals or entities acting through one or more persons resident outside India, indicating that foreign individuals or entities can be considered Significant Beneficial Owners.