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Ministry rolls out new form for corporate disclosure of ‘Significant Beneficial Owners’

K.R. Srivats New Delhi | Updated on July 03, 2019 Published on July 03, 2019

The Corporate Affairs Ministry has rolled out the much awaited Form BEN-2 that spells out the format in which companies will have to disclose their ‘Significant Beneficial Owners’ (SBO) to the Registrar of Companies (RoCs).

This marks the final step of the SBO journey that the government initiated last year to bring transparency in the manner in which shares of companies are held and align the country’s regulatory framework with the recommendations of the Financial Action Task Force (FATF), an intergovernmental organisation focused on combating money laundering and terror financing, according to corporate observers.

Under the current company law, the definition of ‘beneficial interest’ in the shares of a company is quite wide and includes, directly or indirectly, through contract or otherwise, the right of a person to exercise rights attached to such shares or receive or participate in any dividends or other distribution in respect of the shares.

Puzzle is complete

Commenting on the MCA move, Sameer Sah, Partner, Khaitan & Co, a law firm, said : “With the form BEN-2 now operational, the last piece of the SBO puzzle is complete. Companies now have to make public the various declarations they have received from people claiming to be SBOs within 30 days. As such, this does not create any new procedure or compliance. The compliance regarding the filing with the registrar of companies was always known”.

Sampath Rajagopalan, Partner, Entity Compliance and Governance, EY India, said the BEN 2 form is quite comprehensive and has elaborately provided for the SBO situations that could arise. It also provides a unique identity number that would be issued for each SBO, he said.

Moin Ladha, Partner, Khaitan & Co, said the notification of the BEN2 is the final step which will enable disclosure and identification of persons having significant influence /control/ beneficial ownership in terms of the SBO Amendment Rules.

Fine to be levied

If a reporting company fails to file the declaration in Form BEN-2 with the Registrar of Companies, or denies inspection of the register, the reporting company and every officer of the company in default will be punishable with fine of not less than ₹10 lakh but which may extend to ₹50 lakh and for continuing failure, a fine of ₹1,000 per day.

Separately, late last year, the SEBI had also issued a circular providing a format for disclosure of SBOs as part of the quarterly disclosure of shareholding pattern to the stock exchanges for listed companies in India which will be effective from the quarter ending March 2019.

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Published on July 03, 2019
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