Companies (Significant Beneficial Owners) Amendment Rules, 2019

In exercise of the powers conferred by Section 469(1) & (2) read with Section 90 of Companies Act, 2013, Central Government hereby makes Companies (Significant Beneficial Owners) Amendment Rules, 2019 further to amend Companies (Significant Beneficial Owners) Rules, 2018.

The details of the provision are mentioned below:

Amendments in  Companies (Significant Beneficial Owners) Rules, 2018

i) Rule 2 Definitions:

In Rule 2, in sub rule 1, for clauses (b) to (e), new clauses (b) to (e) substituted and sub-rule (f) to (i) inserted

 ii) Rule 2A Duty of the reporting company:

In principal rule 3 & 4, New Rule 2A inserted

iii) Rule 3 Declaration of significant beneficial ownership u/s 90:

In principal rule 3, New Rule 3 substituted

 iv) Rule 4 Return of significant beneficial owners in shares:

In principal 4, New Rule 4 substituted

v) Rule 7 Applicability to Tribunal:

In principal rule 7, New Rule 7 substituted

 vi) Rule 8 Non Applicability:

In principal rule 8, New Rule 8 substituted

vii) Annexure:

In Annexure new forms BEN-1, BEN-2, BEN-3 & BEN-4 substituted

Important definitions

1) “Majority Stake" -

(i) holding more than one-half of the equity share capital in the body corporate; or

(ii) holding more than one-half of the voting rights in the body corporate; or

(iii) having the right to receive or participate in more than one-half of the distributable dividend or any other distribution by the body corporate;

2) "significant beneficial owner" -

In relation to a reporting company means an individual referred to in sub-section (1) of section 90, who acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, namely:-

(i) holds indirectly, or together with any direct holdings, not less than 10% of the shares;

(ii) holds indirectly, or together with any direct holdings, not less than 10% of the voting rights in the shares;

(iii) has right to receive or participate in not less than 10% of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;

(iv) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct-holdings alone

Compliances to be done

I) In case shareholding is less than 10%:

No further compliance is required

II) In case shareholding is more than 10% Directly by:

Individual – If MGT-6 is filed, compliances of BEN-1 by person holding Beneficial Interest

III) In case shareholding is more than 10% Indirectly by:

i) Body corporate – Individual owner of shareholder company/body corporate having more than 50% of shares or voting rights and Individual holding more than 50% of shares or voting rights of Ultimate Holding Company, , compliances of BEN-1 by individual owner holding Beneficial Interest

ii) HUF - compliances of BEN-1 by Karta, compliances of BEN-1 by Karta

iii) Partnership firm – Partner and in case partner is company or body corporate then individual holding more than 50% of that partner company or body corporate, compliances of BEN-1 by Partner

iv) Trust –

i) Discretionary Trust – Compliances of BEN-1 by Trustee

ii) Specific Trust - Compliances of BEN-1 by Beneficiary

iii) Revocable Trust - Compliances of BEN-1 by Author/Settler of Trust

v) Pooled Investment Vehicle/Entity controlled by pooled Investment vehicle –

Compliances of BEN-1 by General partner/Investment manager/CEO where Investment manager of such pooled vehicle is a body corporate or partnership entity

Reporting of Form BEN-1 by SBO

Every individual who is a significant beneficial owner in a reporting company shall file a declaration in Form No. BEN-1 to the reporting company within 90 days of date of commencement of the Companies (Significant Beneficial Owners) Amendment Rules, 2019 i.e. 08.05.2019

Return in Form BEN-2

Upon receipt of declaration in Form BEN-1, reporting company shall file a return in Form BEN-2 with ROC in respect of such declaration, within 30 days from the date of receipt of such declaration along with prescribed fees