On 8th February 2019, the Ministry of Corporate Affairs (MCA) amended Companies (Significant Beneficial Owners) Rules, 2018 to make it easier for the MCA to identify the key owners of a company. The new rules are meant to provide clarity to determine individuals or entities that are Significant Beneficial Owners (SBO) of a company. They also lay down detailed and elaborate procedures for seeking a declaration from SBOs and to file their returns through Form BEN-2 to the ROC.
Who is a Beneficial Owner: Every individual, whether acting alone or together (through one or more persons or trust whether resident in India or outside) who holds beneficial interests in the shares of a company or the right to exercise or the actual exercising of significant influence.
The goal of these amendments is to bring transparency in the shareholding structure of a company and help government agencies to identify and prevent illegal activities such as benami and money laundering.
As per these new rules, every company has to identify persons holding more than 10% of shares or voting rights in the company and obtain a declaration from them in Form BEN-1. To solicit the declaration in Form BEN-1, the company shall send a letter in Form Number BEN-4. Upon receipt of the declaration Form BEN-1, the reporting company shall file a return in Form BEN-2 with the ROC within thirty days from receipt of the BEN-1 declaration along with prescribed fees.
BEN-2 must be certified by a practising professional who may be a Chartered Accountant, Company Secretary or a Cost Accountant.
For companies with share capital, fee structure for filing Form BEN-2 is as follows:
| Nominal share capital | Applicable fees |
| Less than 1,00,000 rupees | 200 rupees |
| 1,00,000 – 4,99,999 rupees | 300 rupees |
| 5,00,000 – 24,99,999 rupees | 400 rupees |
| 25,00,000 – 99,99,999 rupees | 500 rupees |
| 1,00,00,000 and above | 600 rupees |
For companies that do not have share capital, applicable fee for filing Form BEN-2 is 200 rupees.
Delay in filing Form BEN-2 will attract fee penalties as follows:
| Delay (days) | Fee penalty |
| Up to 30 days (after expiry of 30 day grace period) | 2 x normal fees |
| 31 – 60 days | 4 x normal fees |
| 61 – 90 days | 6 x normal fees |
| 91 – 180 days | 8 x normal fees |
| 181 days and above | 12 x normal fees |
The return of SBO of the company (and any changes therein) to the ROC must contain names, addresses and all other details such as date of entry of members in the register of members. It is mandatory to enter the number of SBOs for whom the form is being filed for declaration (maximum = 9)
The following companies and entities are exempted from filing Form BEN-2:
- If the authority is constituted by the central government under Section 125(5) of the Act
- Holding reporting company, provided its details are reported in Form BEN-2
- Central Government/State Government/Local Government
- Reporting company/body corporate/any entity controlled by the Central Government/State Government/Local Government
- Investment vehicles registered/regulated under Securities and Exchange Board of India, including mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs) and Infrastructure Investment Trust (InVITs)
- Investment vehicles regulated by RBI, IRDA or PFRDA
Does your company fall under the ambit of these new MCA rules? You must file Form BEN-2 to declare Significant Beneficial Owners (SBO) or face penalties!
Taxguru Consulting Services can help you file Form BEN-2 easily and at minimal cost. Contact Us today!