What is Form BEN-2? – A Complete Analysis

This declaration only applies to the Significant Beneficial Owners of the business who have disclosed their position in the company via ownership or voting rights and must be submitted with the registrar in line with Section 90 of the Companies Act, 2013. Beneficial Owners are shareholders who possess at least 10% of the company’s shares or voting rights via a Significant Beneficial Ownership (SBO). Businesses registered under the Companies Act, 2013 are required to provide the following information in response to the MCA’s declaration about the filing of report BEN 2. Under the Companies (Significant Beneficial Owners) Second Amendment Regulations, 2019, Form BEN-2 (Return to the Registrar in respect of Declaration under Section 90) is now available for submission (published on July 1, 2019).

After 30 days of obtaining such a beneficial interest in such a business, the beneficial owner is obliged to reveal his participation in the company’s shares by submitting Form BEN-2 to the Registrar. All firms are required to submit a Form BEN-2 with the Registrar stating their beneficial interest in the company in line with Section 90(4) of the Companies Act, 2013, which states that this is a legal requirement.

Under Section 90 of the Companies Act, 2013, any person who has the following rights in a business is an SBO:

• 10% of the total holdings.
• Direct or indirect voting counts for 10% of the total.
• The right to receive 10 percent of the total dividend payment on indirect holdings.
• Directly holding or exerting significant influence or control.

Every company is obliged to submit a return with the ROC for the following reasons, as stated in the MCA’s Form BEN-2, which was made available to the general public on February 8th, 2019.

• Section 90 Statement of Significant Beneficial Ownership
• Beneficial Ownership Has Changed Significantly.
• Holding Reporting Corporation Declaration.

The filing of e-FORM BEN-2 Owner is required under the Companies (Significant Beneficial Owners) Regulations of 2018 as revised by the Companies (Significant Beneficial Owners) Amendment Rules of 2018.

Response to the Registrar of Companies about the Declaration required under Section 90 of the Companies Act, 2013, and the Registrar of Companies’ response. BEN-2. Registry of Significant Beneficial Owners of firms is governed by Section 90 of the Companies Act, 2013

Return of Beneficial Interest of Form BEN-2

A Return of Beneficial Owners, or shareholder holding 10% or more of the shares, must be produced by every publicly traded company (the threshold was formerly 2 percent). To the whole current significant beneficial owner, a one-time payment will be provided. When the current significant beneficial owners change, it must be filed anew.

By law, every corporation is required to disclose the names of all shareholders who control 10 percent or more of the firm’s beneficial interest. Significant Beneficial Owners are the people in question (SBO). The firm is responsible for locating SBOs and advising them of their need to register their interests. In addition, SBOs are expected to provide the entire disclosure within 90 days of the new rule’s adoption in the required Form BEN-1, and if a company discovers that any of the information revealed by the SBO is inaccurate, it may file a complaint with the NCLT.

Within 30 days after receiving the SBO’s declaration, Form BEN-2 must be submitted. This document has to be signed by a person who is authorized to do so, who was chosen by the board of directors, and then it needs to be verified by the appropriate authorities.

Form BEN-2 Must Be Filed By Significant Beneficial Owners

On February 8th, 2019, the Ministry of Corporate Affairs published the Companies (Significant Beneficial Owners) Regulations, 2018 and the Companies (Significant Beneficial Owners) Amendment Rules, 2019. (MCA). Each business that is obliged to submit a return to the Registrar of Companies is subject to these requirements. Significant Beneficial Owners of the reporting entity would be included in the return. This will make it possible for the government to determine who, in reality, retains ownership of the corporate organization.

The Following Forms Are Accessible Under The Significant Beneficial Owners Regulations:

• Form BEN-1 – Statement by Beneficial Owner Who Holds or Acquires Significant Beneficial Interest in Shares
• Form BEN-2 – Section 90 Declaration Return to the Registrar
• Form BEN-3 – Beneficial Owner with Significant Beneficial Interest Registration
• Form BEN 4 – Notification Seeking Information Regarding Significant Beneficial Ownership,

What is a Significant Beneficial Owner?

Significant beneficial owner is defined as “a person mentioned in paragraph (1) of section 90 who, either alone or jointly, or through one or more people or trusts, owns one or more of the following rights or entitlements in such reporting entity, namely:

• Hold at least 10 percent of the company’s equity in both indirect and direct ownership;
• Directly or indirectly controls ten percent or more of the voting power of the shares;
• Has the right to receive or participate in not less than 10 percent of the total distributable dividend or other payment during a fiscal year via indirect holdings alone or in conjunction with any direct holdings;
• Has the right to exert or really exerts significant influence or control in a way other than through direct ownership alone; or
• Exercises such influence or control.
• Controlling the Situation Significantly (Indirect)
• The Reporting Company is a member of one or more layers of corporate ownership (Indirect)
• The Owner has power over organizations that have an effect on the actions of the Reporting Company.

Non-Applicability

The authority under Section 125 of the Investor Education and Protection Fund

• A holding reporting company, provided that information about such a holding reporting business must be reported in Form No. BEN 2; the federal, state, or municipal governments;
• a business, organization, or institution that reports its financials to the government, whether it be the Central Government, a State Government, or a combination of the two;
• Investment Vehicles that are registered with the Securities and Exchange Board of India, such as mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs), and Infrastructure Investment Trusts;
• Investment Vehicles that are monitored by the Central Bank of India, the Insurance Regulatory and Development Authority of India, or the Pension Fund Regulatory and Development Authority of India.

NCLT Application

If a person fails to give the necessary information, the reporting business is obligated to file a petition with the National Company Law Tribunal (NCLT) in order to have a restriction placed on that person’s shares, dividends, or voting rights.

Penalty: If this provision is not followed, the Company and any offending officer shall be subject to fines under Sections 89, 90, and 447 of the Companies Act, 2013.

Information Needed for Form BEN-2

Following are some vital information required for Form BEN-2:

• Significant Beneficial Owners: Information (SBOs)
• Number of Members (Individual/Business/HUF/LLP/Partnership/Firm/Trust/Corporate Organization) having Indirect as well as Direct Holding in the Company, including Joint Holding.
• Members’ complete names, postal addresses, PAN numbers, passport numbers, and email addresses.
• The date the Member acquired Significant Beneficial Ownership in the Business
• The date when the member’s name was added to the company registration
• SBO and Holding Company Information.
• Statement in BEN 1 from SBOs and the day the Company received the declaration

What is Indirect Ownership?

Indirect Ownership means to exercise a right in the reporting firm via a member of the reporting company, the indirect owners in the company shall file their ownership under form BEN-1 as per the provisions of Rule 3 of the Companies (Significant Beneficial Owners) Rules, 2018. The following details shall be filled in by the indirect owners:

(a) Member Type (Company/LLP/Any other Body Corporate/HUF/Partnership Firm/Discretionary Trust/Charitable Trust/Specific Trust/Revocable Trust/Pooled Investment Vehicle (PIV)/Entity controlled by PIV)

(b) a registration number that was issued by the organization that was formed to monitor compliance with the Act, such as a Corporate Identification Number (CIN) or a Limited Liability Partnership Identity Number; (LLPIN).

(c) Member’s Full Name:

(d) Address Line I: Address Line II: City: State: Country: Postal Code:

(e) The kind of indirect ownership interest or right that is being exercised in the reporting company:

• By virtue of shares: %
• Voting rights in shares: %
• As a direct result of having the right to receive a dividend or any other kind of distribution:
• As a direct result of the control that was exercised (attach copy of agreement)
• As a direct consequence of wielding a significant amount of influence (attach copy of agreement)

(f) The status of a member of the reporting firm who is a significant beneficial owner. In the case of a corporation or other kind of legal entity, a person; in the case of a limited liability partnership, a partner (LLP).

• HUF’s Karta
• The Trustee, regardless of whether the Trust is Charitable or Discretionary.
• In the event of a named trust, the beneficiary
• In the event of a revocable trust, the author or settlor
• General Partner, Investment Manager, or Chief Executive Officer if it manages a pooled investment vehicle or firm.

(g) Indicate whether or not there is a significant beneficial owner if the member is a limited liability corporation or partnership:

• Is a partner
• Possesses a Preponderant Share in the Body Corporate Partner
• Holds the lion’s share of the body corporate partner’s ultimate holding company.

(h) Indicate whether the member is a corporation, or another legal body and the significant beneficial owner is the owner of the following:

• Ownership of a Supermajority Interest in That Company or Other Organization
• A controlling interest in the enterprise’s parent holding firm

A Distinction among Form BEN 1, BEN 3 and BEN 4

Basis of Distinction	Form BEN 1	Form No. BEN-3	Form No. BEN 4
Statutory grounds	in accordance with rule 2a, 3 and section 90(1) of the companies act 2013: beneficial ownership in shares: who has or acquires significant beneficial ownership in shares	In line with Section 90(2) of the Companies Act, Rule 2013 and Rule 5(1), the Company’s Registry must have the name of the Beneficial Owners Having Significant Beneficial Interest.	In accordance with Rule 2A, 6, and 7 of the Companies Act, Section 90(5), and 2013.
Form filling Reason	In compliance with section 90, for disclosure of significant beneficial ownership and for change in significant beneficial ownership.	To comply with section 90(2) of the companies act, 2013	To give notice to unregistered beneficial owners in accordance with Section 90 of the Companies Act, 2013 and the subsequent Regulations: The Organization Having Grounds to Believe that, You are the company’s significant beneficial owner; having knowledge of the identify of a significant beneficial owner or another person;holding at least 10 percent of the company’s shares, voting rights, dividend rights, or other distribution rights
Details about the individual or organization with the significant beneficial interest	the name of the significant beneficial owner (given name and last name) address and email id father’s/mother’s/name spouse’s profession nationality passport number (in case of foreign national. The following information shall be required by the direct significant owners of the company: Hold by virtue of sharesVoting shares in the company Entitlement to a dividend or any other kind of distributable paymentAs a direct result of the control that was exercised (attach copy of agreement)As a direct consequence of wielding a significant amount of influence (attach copy of agreement)	Address of the registered office:Beneficiary Owner’s NamePostal and email addressesDate of BirthAgeName of the Spouse, Mother, or FatherNationality and OccupationPersonal Identification Number (PAN) or Passport Number (in case of foreign national)Date of Declaration in accordance with Section 90Termination DateRegistration DateDate of BEN 2 Submission (SRN wise)Any further interests, if any	The unregistered beneficial owners are obliged to give the following information within a period of thirty days beginning with the date on which they receive the notice: The Beneficiary Owner’s Full Name and AddressS.B.O.’s PANThe name of the person, company, trust, or other organization in whose name the shares or rights are registered or ownedDate of obtaining beneficial interest: Documentation, terms and conditions, or any other information on SBO ownership Reason for not filling out Form No. BEN-1.Please give any other information that is connected, pertinent, or in your possession so that the company can help you in reviewing this case.

Important Details About the Submission of A BEN 2 Return

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2. When the form will be made accessible to download from the “MCA Portal^[1]” will determine the deadline for submitting the BEN 2 form.
3. Regardless of the size or value of the investment, the SBO is required to furnish a comprehensive account of all interests in HUFs, sole proprietorships, BEN ship companies, and other kinds of enterprises.
4. The first thing that has to be done in order to complete the BEN-2 is to determine who the company’s Significant Business Owners are. According to the rule, everyone who owns 10 percent or more of the company’s shares is deemed an SBO.
5. A Register of Beneficial Owners Having Significant Beneficial Interest in the Business must be compiled and maintained by the company once the SBO has been identified using Form No. BEN-3.
6. The corporation is obliged to send an intimation letter to each SBO seeking their information and particulars in the stipulated Form BEN -1. The Form is meant to capture all investments made by the SBO in the Business or elsewhere.
7. Form BEN-2 must be submitted for all SBO declarations as the last stage.

Conclusion

The SBO must include all necessary and relevant information such as the Number of members owning indirect and direct shares in the business, including joint holdings Name, address, PAN Number, Passport Number, and Email ID of members, The date the Member acquired Significant Beneficial Ownership in the Business, The SBOs of the holding company and the date that the member’s name was added to the company register are both required information. Submission of the BEN form is mandatory compliance to be followed by the organizations with due care.

Also Read:
A Complete Analysis Of Section 90 Of The Companies Act, 2013