What is e-FORM No. BEN-2 - COMPANIES ACT, 2013 (AS AMENDED)

Every individual who is acting alone or together, or through  one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests as may be prescribed in the shares of a company incorporated in India or a right to exercise, or the  actual exercise significant influence or control as defined under the Act over the company shall make a declaration to the company in FORM BEN-1, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof under Companies Act, 2013 ( as amended) and in turn, the company shall file e-form BEN-2 with ROC within 30days of receipt of e-form  BEN-1 from such person.

E-Form BEN-2 is required to be filed pursuant to Pursuant to Section 90(4) of the Companies Act, 2013 and Rule 4 of the Companies (Significant Beneficial Owners) Rules 2018, as below:

Section 90(4):

Every company (the reporting company) shall file a return of significant beneficial owner (SBO) of the company and changes therein with the Registrar of Companies containing names, addresses and other details within such time, in such form and manner as may be prescribed.

Rule 4:

Upon receipt of declaration under rule 3, the company (the reporting Company) shall file a return in Form No. BEN-2 with the Registrar of Companies in respect of such declaration, within a period of thirty days from the date of receipt of such declaration by it, along with the fees as prescribed in Companies (Registration offices and fees) Rules, 2014.”

Obligation of reporting company under the Act

Every reporting company shall take all the necessary steps to find out if there is any individual who is a significant beneficial owner in the company and obtain declaration in Form No. BEN-1 comprising detail such as Name, Father’s Name, Date of Birth, Address, Nationality and details of the members of the reporting through whom the SBO is holding right in the reporting Company.

Who is significant beneficial owner?

“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 ten percent, of the shares;
 

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

(iii) has right to receive or participate in not less than ten per cent, 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:

Explanation I - For the purpose of this clause, if an individual does not hold any right or entitlement indirectly under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial owner.
 

Explanation II - For the purpose of this clause, an individual shall be considered to hold a right or entitlement directly in the reporting company, if he satisfies any of the following criteria, namely.'

(i) the shares in the reporting company representing such right or entitlement are held in the name of the individual;
 

(ii) the individual holds or acquires a beneficial interest in the share of the reporting company under sub-section (2) of section 89, and has made a declaration in this regard to the reporting company.

Explanation III - For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member of the reporting company, namely: -

(i) where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual,

(a) holds majority stake in that member; or

(b) holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member;

(ii) where the member of the reporting company is a Hindu Undivided Family (HUF) (through karta), and the individual is the karta of the HUF;

(iii) where the member of the reporting company is a partnership entity (through itself or a partner), and the individual,-

(a) is a partner; or

(b) holds majority stake in the body corporate which is a partner of the partnership entity; or

(c) holds majority stake in the ultimate holding company of the body corporate which is a partner of the partnership entity.

(iv) where the member of the reporting company is a trust (through trustee), and the individual,-

(a) is a trustee in case of a discretionary trust or a charitable trust;

(b) is a beneficiary in case of a specific trust;

(c) is the author or settlor in case of a revocable trust.

BEN-3 Register of significant beneficial owners 

The company shall maintain a register of significant beneficial owners in Form No. BEN-3. The register so maintained,  shall remain open for inspection by the members of the company during business hours, on every working day on payment of fee as may be decided by the company.

 BEN-4 – Company Notice to the shareholders 

A company also has right to issue notice to its shareholders to find out information about their ultimate beneficiary significant owner by issuing notice in Form No. BEN-4 to be complied within such time as may be specified in the notice.  

Entities not covered by these Regulations

 (a) the authority constituted under sub-section (5) of section 125 of the Act;

(b) its holding reporting company: Provided that the details of such holding reporting company shall be reported in Form No. BEN-2

(c) the Central Government, State Government or any local Authority;

(d) (i) a reporting company, or (ii) a body corporate, or (iii) an entity, controlled by the Central Government or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments;

(e) Securities and Exchange Board of India registered Investment Vehicles such as mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs), Infrastructure Investment Trust (lnVITs) regulated by the Securities and Exchange Board of India,

(f) lnvestment Vehicles regulated by Reserve Bank of India, or Insurance Regulatory and Development Authority of India, or Pension Fund Regulatory and Development Authority.

Penalties for non-filing  of  BEN-2

Section 90(11) of the Act, 2013 provides for penal provisions for the failure of the part of the reporting company and every officer in default in complying with the provisions of Section 90(4) i.e. filing of BEN-2 and changes therein with the Registrar within stipulated time as under:-

For company and every officer in default:- Rs. 10 Lakhs – Rs. 50 Lakhs

For Continuing default: – Upto Rs. 1000 for every day after first day of failure.

Remedial action in case of  default.

In case of default without any reasonable cause, it is advisable to deposit e-form BEN-2 with additional fee and go for compounding as prescribed u/s 441 of the Companies Act, 2013

However, if the company has already deposited belated e-form BEN-2 and it has received a show cause notice from RoC, in that case the company has following options:-

• The company can file suitable reply to the show cause notice explaining the reasons for delay in deposit of the form alongwith documentary evidence if any with the prayer that the delay in deposit of form may please be condoned in view of facts and circumstances stated therein.
   
• The company can go for compounding of offence as prescribed u/s 441 of the Companies Act, 2013.