|Who shall disclose?
Every individual, who acting alone or together, or through one or more persons or trust, possess one or more of the following rights in a company shall be deemed to be a significant beneficial owner (SBO):
· holds indirectly, or together with any direct holdings, at least 10% of the shares or voting rights;
· has the right to receive or participate (by virtue of their indirect and/or direct holdings) is not less than 10% of the total distributable dividend or any other distribution; or
· has the right to exercise significant influence or control (through their indirect holdings only) on the company.
However, individuals directly holding shares of the company in their own name or hold or acquires a beneficial interest in the share of the reporting company under subsection section 89 (2) of the Act and necessary reporting is made is not be considered to be a significant beneficial owner.
Further, an individual is considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member of the reporting company, namely:
· If the member is a body corporate (Indian or foreign) – the individual holding majority stake in that body corporate or majority stake in the ultimate holding company of such body corporate member
· If the member is a HUF – the individual who is the Karta of the HUF
· If the member is a partnership entity – the individual is a partner or holding a majority stake in a body corporate which is a partner or majority stake in the ultimate holding company of such body corporate which is a partner
· If the member is a trust – the individual who is a trustee (discretionary or charitable trust), a beneficiary (Specific trust), Author/settlor (revocable trust)
· If the member is a pooled investment vehicle or an entity controlled by the pooled investment vehicle – the individual who is a general partner or investment manager or Chief Executive Officer where the investment manager of such pooled vehicle is a body corporate or a partnership entity
What needs to be done?
· To send notice of this requirement to all non-individual members who hold not less than 10% of its Shares, or voting rights, or right to receive or participate in the dividend or any other distribution payable in a financial year seeking information in Form BEN-4.
· The company to identify any such individual who is an SBO and obtain a declaration of significant beneficial ownership in Form No. BEN-1.
Non-applicability of this requirement:
These rules shall not apply if the shares of a reporting company are held by the following entities:
· Investor Education and Protection Fund
· Holding Reporting Company of the Reporting Company (however, details of such holding company have to be filed in Form No. BEN-2)
· the Central Government, State Government or any local Authority
· any entity controlled by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments;
· Investment Vehicles such as mutual funds, alternative investment funds (AIF), Real Estate Investment Trusts (REITs), Infrastructure Investment Trust (InVITs) regulated by the Securities and Exchange Board of India;
· Investment Vehicles regulated by Reserve Bank of India, or Insurance Regulatory and Development Authority of India, or Pension Fund Regulatory and Development Authority.