The Form BEN-2 has been introduced to unveil the actual Individual owners behind the Dummy entities holding a stake in the Reporting Company. The prime concern is to identify the actual culprit behind any fraud done in the name of Reporting Company.
Reporting Onus
- The onus of reporting or providing information is upon the SBO in form BEN-1 and not upon the reporting company.
- The Reporting Company is only liable to file BEN-2 upon receipt of BEN-1 by the SBO.
- The onus for collecting the information in BEN-1 (BEN-1 word format is available for download) comes to Reporting Company when there is a reasonable cause to believe for a person being SBO.
- The Company is also required to circulate Notice in form BEN-4 (BEN-4 word format is available for download) to all the shareholders/ stakeholders.
- The company shall maintain a register of significant beneficial owners in Form No. BEN-3
- The company shall —
- where that person fails to give the company the information required by the notice within the time specified therein; or
- where the information gave is not satisfactory,
apply to the Tribunal within a period of fifteen days of the expiry of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to the transfer of interest, suspension of all rights attached to the shares and such other matters.
Governing Law
Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five percent. or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company (herein referred to as “significant beneficial owner”), shall make a declaration to the company, 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, as may be prescribed.
Who are the Significant Beneficial Owners?
Significant Beneficial Owner means an individual referred to in sub-section (1) of section 90 (holding ultimate beneficial interest of not less than ten percent.) read with sub-section [10] of section 89, but whose name is not entered in the register of members of a company as the holder of such shares, and the term ‘significant beneficial ownership’ shall be construed accordingly;
For the purpose of this clause, the significant beneficial ownership, in case of persons other than individuals or natural persons, shall be determined as under-
(i) where the member is a company, 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 percent. the share capital of the company or who exercises significant influence or control in the company through other means;
(ii) where the member is a partnership firm, 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. of capital or has entitlement of not less than ten per cent. of profits of the partnership;
(iii) where no natural person is identified under (i) or (ii), the significant beneficial owner is the relevant natural person who holds the position of senior managing official;
(iv) where the member is a trust (through the trustee), the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with not less than ten percent. interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership;
Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed.
Process for Identifying Significant Beneficial Owners and Form Filing
Step 1: Identifying
Company shall give notice, in the prescribed manner to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe—
- to be a significant beneficial owner of the company;
- to be having knowledge of the identity of a significant beneficial owner or another person likely to have such knowledge; or
- to have been a significant beneficial owner of the company at any time during the three years immediately preceding the date on which the notice is issued,
and who is not registered as a significant beneficial owner with the company as required under section 90?
Step 2: Information By Beneficial Owner
The information required by the notice under sub-section (5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice.
Step 3: Filing Concerned Form
Where any declaration under BEN1 is received by the company, it shall file a return in Form No. BEN-2 with the Registrar in respect of such declaration, within a period of thirty days from the date of receipt of declaration by it, along with the fees as prescribed in companies (Registration offices and fees) Rules, 2014.
Concerned Dates
- Last date for submission of BEN-1 with the company- 90 days from FEB. 08, 2019.
- Last date for submission of BEN 2 with the concerned ROC- 30th July 2019. i.e 30 days from the effective date of BEN-2.
Penal Provisions Under Section 90
- If any person fails to make a declaration as required under sub-section (1) (in Form BEN-1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees or with both 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 any person wilfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration made under this section, he shall be liable to action under section 447. (imprisonment of 10 years)
- If a company, required to maintain register under sub-section (2) (in Form BEN-3) and file the information under sub-section (4) (in FOrm BEN-2), fails to do so or denies inspection as provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than ten lakh rupees but which may extend to fifty 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.
Note:
* BEN-2 filing is NOT APPLICABLE to you ONLY if you are a Government Company.
* No Notary/ Stamp Duty/Apostille is required on BEN 1.
Download the BEN 4 Word Format
Download the BEN 1 Word Format