Companies Act §90 — Significant Beneficial Owner (SBO)

A Significant Beneficial Owner is an individual who, directly or indirectly, holds ≥ 10% of shares, voting rights, or dividend, or exercises significant influence/ control over a company. The SBO files FORM BEN-1 with the company; the company files FORM BEN-2 with the Registrar and maintains a register in FORM BEN-3.

Key points

• §90 read with the SBO Rules 2018 defines a SIGNIFICANT BENEFICIAL OWNER as an INDIVIDUAL who, acting alone or together or through one or more persons (including a trust), possesses one or more of: (a) holding INDIRECTLY, or together with any direct holding, not less than 10% of the SHARES;
• (b) not less than 10% of the VOTING RIGHTS;
• (c) the right to not less than 10% of the DISTRIBUTABLE DIVIDEND;
• or (d) the right to exercise, or actual exercise of, SIGNIFICANT INFLUENCE or CONTROL.
• A purely direct holding does not by itself create an SBO — an INDIRECT element is required.
• COMPLIANCE: the SBO files a declaration in FORM BEN-1 with the company;
• the company files FORM BEN-2 with the Registrar within 30 days of receipt;
• and maintains a REGISTER OF SBOs in FORM BEN-3.
• The company must send notice in FORM BEN-4 to persons it believes to be SBOs.
• Non-compliance attracts penalties and the shares may be subject to restrictions by the Tribunal.

Reference: §90 Companies Act 2013 read with SBO Rules 2018