Beneficial Ownership
The Ministry of Corporate Affairs has notified the new Section 90 of the Companies Act, 2013 and Companies (Significant Beneficial Owner) Rules, 2018.
In terms of the Rules, an individual (Natural person) who holds Ultimate Beneficial Interest of not less than ten percent (10%) and whose name is not entered as a member in the register of members as the holder of such shares of the Indian company (SBO) is required to provide a Declaration regarding the interest held by him/her in the Indian company.
Beneficial Interest through Body Corporate as Shareholder of the Indian Company: Where the Member/Shareholder of an Indian Company is a body corporate, the significant beneficial owner is the natural person, who, whether acting alone or together with other natural persons, or through one or more other persons or trusts, holds not less than ten per cent share capital of the body corporate (who is a Member/Shareholder) or who exercises significant influence or control in the body corporate through other means.
The Rules prescribe the manner of obtaining the declaration and other compliances applicable to the Indian company. The transition provisions prescribed under the Rules require the SBO to submit declaration to the Indian company by 12.09.2018 and the Indian Company will also have to file such declaration with the Registrar of Companies within 30 days thereof.
The following activities are required to be undertaken in
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Assistance to the Indian Company to find out its Ultimate Beneficial Owner on the basis of the prescribed rules.
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Preparation of Declaration on behalf the Significant Beneficial Owner in Form Ben-1 which is required to be submitted with the Indian Company before 12.09.2018.
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Preparation and filing of SBO Return by the Indian Company in Form Ben-2 with the Registrar of Companies within a period of 30 days from the date of receipt of Declaration (Ben-1) by the Indian Company.
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Assistance in maintaining Register of Significant Beneficial Owners by the Indian company in Form Ben-3.
Penalty for Non Compliance: If the SBO fails to make a declaration as required, he shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.
If a company fails to proceed with the compliance, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than INR 10,00,000 but which may extend to INR 50,00,000 and where the failure is a continuing one, with a further fine which may extend to INR 1,000 for every day after the first during which the failure continues