17 August 2018
Declaration of Significant Beneficial Owner
In an attempt to address the global issue of money laundering, bribery and corruption, insider dealings, tax fraud, terrorist financing and other illegal activities, the Ministry of Corporate Affairs (MCA), based on the recommendation of the Financial Action Task Force, an intergovernmental organization has notified the provisions of Disclosure of Significant Beneficial Ownership of Companies with effect from 13 June 2018.
Section 90 of the Companies Act, 2013 read with the Companies (Significant Beneficial Owner) Rules, 2018 are notified with an intent to ensure adequate, accurate and timely information on the beneficial ownership of companies to the regulatory authorities and to identify and verify the identity of the individuals who ultimately own and control a corporate entity.
Every individual who, either by himself or with others (including a trust and persons resident outside India), directly or indirectly, holds the beneficial interest of at least 10% in shares of the company or has the right to exercise significance influence or control over a company, shall make a declaration to that company specifying the nature of his beneficial interest (Significant Beneficial Owner (SBO)). Every significant beneficial owner shall file a declaration in Form No. BEN-1 to the company in which he holds the significant beneficial ownership on the date of commencement of these rules within 90 days from the date of commencement of the rules (i.e., 11 September 2018) and within 30 days in case of any change/acquisition of SBO.
Every company shall maintain a register of the interest declared by such individuals along with the prescribed particulars of such individuals and keep the register open for inspection by shareholders and file a return of SBOs of the company with the Registrar, containing the prescribed particulars.
The primary obligation of disclosure of significant beneficial interest has been cast on all natural persons who hold such interest directly and indirectly, regardless of their domicile or residency status. The company may give notice for seeking information on whom the company knows or has reasonable cause to believe to be a SBO of the company or to be having knowledge of the identity of a SBO or another person likely to have such knowledge or to have been a SBO of the company at any time during the three years immediately preceding the date on which the notice is issued.
Section 90 of the Companies Act, 2013 provides for penal provisions on the SBO in case of failure to make a declaration and on the Company in case of failure to maintain the register and file the information and denial of inspection.
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