The Companies (Significant Beneficial Owners) Amendment Rules, 2019.

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 8th February, 2019

G.S.R. 100(E).— In exercise of the powers conferred by sub-sections (1) and (2) of section 469 read with
section 90 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to
amend the Companies (Significant Beneficial Owners) Rules, 2018, namely:-
1. (1) These rules may be called the Companies (Significant Beneficial Owners) Amendment Rules, 2019.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Significant Beneficial Owners) Rules, 2018 (hereinafter referred to as the principal rules), in rule 2,
in sub-rule (1), for clauses (b) to (e), the following clauses shall be substituted, namely:-
‘(b) “control” means control as defined in clause (27) of section 2 of the Act;
(c) “form” means the form specified in Annexure to these rules;
(d) “majority stake” means;-
(i) holding more than one-half of the equity share capital in the body corporate; or
(ii) holding more than one-half of the voting rights in the body corporate; or
(iii) having the right to receive or participate in more than one-half of the distributable dividend or any
other distribution by the body corporate;
(e) “partnership entity” means a partnership firm registered under the Indian Partnership Act, 1932 (9 of 1932) or
a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009);
(f) “reporting company” means a company as defined in clause (20) of section 2 of the Act, required to comply
with the requirements of section 90 of the Act;
(g) “section” means a section of the Act;
(h) “significant beneficial owner” in relation to a reporting company means an individual referred to in subsection (1) of section 90, who acting alone or together, or through one or more persons or trust, possesses one
or more of the following rights or entitlements in such reporting company, namely:-
(i) holds indirectly, or together with any direct holdings, not less than ten per cent. of the shares;
(ii) holds indirectly, or together with any direct holdings, not less than ten per cent. of the voting
rights in the shares;
(iii) has right to receive or participate in not less than ten per cent. of the total distributable
dividend, or any other distribution, in a financial year through indirect holdings alone, or together
with any direct holdings;
(iv) has right to exercise, or actually exercises, significant influence or control, in any manner
other than through direct holdings alone:
Explanation I. – For the purpose of this clause, if an individual does not hold any right or entitlement indirectly
under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial owner.
Explanation II. – For the purpose of this clause, an individual shall be considered to hold a right or entitlement
directly in the reporting company, if he satisfies any of the following criteria, namely.––
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(i) the shares in the reporting company representing such right or entitlement are held in the name of the
individual;
(ii) the individual holds or acquires a beneficial interest in the share of the reporting company under subsection (2) of section 89, and has made a declaration in this regard to the reporting company.
Explanation III. – For the purpose of this clause, an individual shall be 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:-
(i) where the member of the reporting company is a body corporate (whether incorporated or registered in
India or abroad), other than a limited liability partnership, and the individual,––
(a) holds majority stake in that member; or
(b) holds majority stake in the ultimate holding company (whether incorporated or registered in
India or abroad) of that member;
(ii) where the member of the reporting company is a Hindu Undivided Family (HUF) (through karta), and the
individual is the karta of the HUF;
(iii) where the member of the reporting company is a partnership entity (through itself or a partner), and the
individual,-
(a) is a partner; or
(b) holds majority stake in the body corporate which is a partner of the partnership entity; or
(c) holds majority stake in the ultimate holding company of the body corporate which is a partner
of the partnership entity.
(iv) where the member of the reporting company is a trust (through trustee), and the individual,-
(a) is a trustee in case of a discretionary trust or a charitable trust;
(b) is a beneficiary in case of a specific trust;
(c) is the author or settlor in case of a revocable trust.
(v) where the member of the reporting company is,-
(a) a pooled investment vehicle; or
(b) an entity controlled by the pooled investment vehicle,
based in member State of the Financial Action Task Force on Money Laundering and the regulator of the
securities market in such member State is a member of the International Organization of Securities
Commissions, and the individual in relation to the pooled investment vehicle,-
(A) is a general partner; or
(B) is an investment manager; or
(C) is a Chief Executive Officer where the investment manager of such pooled vehicle is a body
corporate or a partnership entity.
Explanation IV. Where the member of a reporting company is,
(i) a pooled investment vehicle; or
(ii) an entity controlled by the pooled investment vehicle,
based in a jurisdiction which does not fulfil the requirements referred to in clause (v) of Explanation III, the
provisions of clause (i) or clause (ii) or clause (iii) or clause (iv) of Explanation III, as the case may be, shall
apply.
Explanation V. – For the purpose of this clause, if any individual, or individuals acting through any person or
trust, act with a common intent or purpose of exercising any rights or entitlements, or exercising control or
significant influence, over a reporting company, pursuant to an agreement or understanding, formal or
informal, such individual, or individuals, acting through any person or trust, as the case may be, shall be deemed
to be ‘acting together’.
14 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
Explanation VI. – For the purposes of this clause, the instruments in the form of global depository receipts,
compulsorily convertible preference shares or compulsorily convertible debentures shall be treated as ‘shares’.
(i) “significant influence” means the power to participate, directly or indirectly, in the financial and operating policy
decisions of the reporting company but is not control or joint control of those policies’.
3. In the principal rules, for rules 3 and 4, the following rules shall be substituted, namely:-
“2A. Duty of the reporting company.- (1) Every reporting company shall take necessary steps to find out if there is any
individual who is a significant beneficial owner, as defined in clause (h) of rule 2, in relation to that reporting company,
and if so, identify him and cause such individual to make a declaration in Form No. BEN-1.
(2) Without prejudice to the generality of the steps stated in sub-rule (1), every reporting company shall in all cases
where its member (other than an individual), holds not less than ten per cent. of its;-
(a) shares, or
(b) voting rights, or
(c) right to receive or participate in the dividend or any other distribution payable in a financial year,
give notice to such member, seeking information in accordance with sub-section (5) of section 90, in Form No.
BEN-4.
3. Declaration of significant beneficial ownership under section 90.- (1) On the date of commencement of the
Companies (Significant Beneficial Owners) Amendment Rules, 2019, every individual who is a significant beneficial
owner in a reporting company, shall file a declaration in Form No. BEN-1 to the reporting company within ninety days
from such commencement.
(2) Every individual, who subsequently becomes a significant beneficial owner, or where his significant beneficial
ownership undergoes any change shall file a declaration in Form No. BEN-1 to the reporting company, within thirty days
of acquiring such significant beneficial ownership or any change therein.
Explanation.- Where an individual becomes a significant beneficial owner, or where his significant beneficial ownership
undergoes any change, within ninety days of the commencement of the Companies (Significant Beneficial Owners)
Amendment Rules, 2019, it shall be deemed that such individual became the significant beneficial owner or any change
therein happened on the date of expiry of ninety days from the date of commencement of said rules, and the period of
thirty days for filing will be reckoned accordingly.
4. Return of significant beneficial owners in shares.- Upon receipt of declaration under rule 3, the reporting company
shall file a return in Form No. BEN-2 with the Registrar in respect of such declaration, within a period of thirty days
from the date of receipt of such declaration by it, along with the fees as prescribed in Companies (Registration offices
and fees) Rules, 2014.”.
4. In the said principal rules, for rules 7 and 8, the following rules shall be substituted, namely:-
“7. Application to the Tribunal.- The reporting company shall apply to the Tribunal, –
(i) where any person fails to give the information required by the notice in Form No. BEN-4, within the time
specified therein; or
(ii) where the information given is not satisfactory,
in accordance with sub-section (7) of section 90, for order directing that the shares in question be subject to
restrictions, including –
(a) restrictions on the transfer of interest attached to the shares in question;
(b) suspension of the right to receive dividend or any other distribution in relation to the shares in question;
(c) suspension of voting rights in relation to the shares in question;
(d) any other restriction on all or any of the rights attached with the shares in question.
8. Non-Applicability.-These rules shall not be made applicable to the extent the share of the reporting company is held
by,-
(a) the authority constituted under sub-section (5) of section 125 of the Act;
(b) its holding reporting company:
Provided that the details of such holding reporting company shall be reported in Form No. BEN-2.
(c) the Central Government, State Government or any local Authority;
(d) (i) a reporting company, or
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(ii) a body corporate, or
(iii) an 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;
(e) Securities and Exchange Board of India registered 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,
(f)Investment Vehicles regulated by Reserve Bank of India, or Insurance Regulatory and Development Authority of
India, or Pension Fund Regulatory and Development Authority.