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Overview

Filing of Beneficial Ownership

Filing of Beneficial Ownership refers to the disclosure of individuals who hold significant control or ownership in a company or entity, as mandated under the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018. This filing ensures transparency in corporate ownership structures and prevents misuse of entities for illicit purposes.

The filing of beneficial ownership requires companies to identify and report individuals holding a significant beneficial interest (25% or more initially, reduced to 10% in later amendments) in the company. These disclosures are crucial for combating tax evasion, money laundering, and fraudulent activities.

Importance

1. Regulatory Compliance : Mandatory under the Companies Act for certain entities.

2. Transparency in Ownership : Helps identify individuals exercising control over a company.

3. Prevention of Fraud : Deters misuse of companies for illegal activities.

4. Supports Corporate Governance : Ensures accountability in decision-making.

5. Avoids Penalties : Non-compliance leads to fines and legal action.

Applicability

  • Applicable Entities :
    • All companies registered under the Companies Act, except for public sector companies.
  • Significant Beneficial Owner (SBO) :
    • An individual holding:
      • At least 10% of shares (directly or indirectly).
      • At least 10% of voting rights or dividend rights.
      • Control over the company through indirect means.
  • Non-Applicability :
    • Public sector companies and entities regulated by other regulatory authorities such as SEBI or RBI are exempt from filing.

Key Compliance Requirements

  • Identification of SBOs:
    • Companies must identify individuals with significant beneficial interest.
  • Filing of Form BEN-1 (Declaration by SBO):
    • SBOs must provide a declaration of their interest to the company.
  • Filing of Form BEN-2 (Company’s Filing to ROC):
    • The company must report the SBO’s details to the Registrar of Companies (ROC) using Form BEN-2.
  • Maintenance of Registers:
    • Maintain a Register of Beneficial Owners (BEN-3) with details of SBOs.
  • Regular Updates:
    • Update filings if there are changes in beneficial ownership.

Documents Required



Features

Features & Benefits of Filing of Beneficial Ownership

Mandatory for SBOs
Required for individuals meeting the SBO criteria.
Prev Next
Focus on Transparency
Aims to uncover hidden ownership structures.
Prev Next
Compliance Forms
Includes Form BEN-1, BEN-2, and maintenance of the BEN-3 register.
Prev Next
Event-Based Filing
Companies must file whenever ownership changes occur.
Prev Next
Digital Filing
Completed online through the MCA portal.
Prev Next

Filing of Beneficial Ownership

Regulatory Oversight
Ensures compliance with ROC and MCA guidelines.
Prev Next
Penalty for Non-Compliance
Companies and SBOs face fines for failure to disclose or file.
Prev Next
Audit-Ready Documentation
Helps maintain records for statutory audits.
Prev Next
Alignment with Global Standards
Supports international efforts to combat financial crimes.
Prev Next
Applicable Across Industries
Relevant to companies in all sectors.
Prev Next


Comparison with Related Services

Feature Beneficial Ownership Filing Corporate Compliance KYC Compliance
Objective Disclose ultimate ownership Ensure governance Verify customer identity
Applicability SBOs in companies All registered companies All businesses onboarding clients
Regulatory Body MCA/ROC MCA RBI/SEBI/IRDAI
Filing Frequency Event-based Annually/Event-based Periodic
Penalty for Non-Compliance High High High


Frequently Asked Questions

What is a Significant Beneficial Owner (SBO)?

An SBO is an individual who holds at least 10% of shares, voting rights, or dividend rights, or controls the company through indirect means.

Who is responsible for filing Form BEN-2?

The company is responsible for filing Form BEN-2 with the ROC after receiving declarations from SBOs.

What are the penalties for non-compliance?

Penalties include fines of up to ₹50,000 for the company and additional daily fines of ₹1,000 for ongoing defaults.

Is Form BEN-2 filing mandatory for all companies?

It is mandatory for private and unlisted public companies, except public sector companies.

What is the purpose of the BEN-3 register?

BEN-3 is maintained by the company to record the details of its SBOs for regulatory and internal reference.

Can an SBO file BEN-1 on their own?

No, SBOs must submit BEN-1 to the company, which then files BEN-2 with the ROC.

Filing of Beneficial Ownership

Overview

Filing of Beneficial Ownership

Filing of Beneficial Ownership refers to the disclosure of individuals who hold significant control or ownership in a company or entity, as mandated under the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018. This filing ensures transparency in corporate ownership structures and prevents misuse of entities for illicit purposes.

The filing of beneficial ownership requires companies to identify and report individuals holding a significant beneficial interest (25% or more initially, reduced to 10% in later amendments) in the company. These disclosures are crucial for combating tax evasion, money laundering, and fraudulent activities.

Importance

1. Regulatory Compliance : Mandatory under the Companies Act for certain entities.

2. Transparency in Ownership : Helps identify individuals exercising control over a company.

3. Prevention of Fraud : Deters misuse of companies for illegal activities.

4. Supports Corporate Governance : Ensures accountability in decision-making.

5. Avoids Penalties : Non-compliance leads to fines and legal action.

Applicability

  • Applicable Entities :
    • All companies registered under the Companies Act, except for public sector companies.
  • Significant Beneficial Owner (SBO) :
    • An individual holding:
      • At least 10% of shares (directly or indirectly).
      • At least 10% of voting rights or dividend rights.
      • Control over the company through indirect means.
  • Non-Applicability :
    • Public sector companies and entities regulated by other regulatory authorities such as SEBI or RBI are exempt from filing.

Key Compliance Requirements

  • Identification of SBOs:
    • Companies must identify individuals with significant beneficial interest.
  • Filing of Form BEN-1 (Declaration by SBO):
    • SBOs must provide a declaration of their interest to the company.
  • Filing of Form BEN-2 (Company’s Filing to ROC):
    • The company must report the SBO’s details to the Registrar of Companies (ROC) using Form BEN-2.
  • Maintenance of Registers:
    • Maintain a Register of Beneficial Owners (BEN-3) with details of SBOs.
  • Regular Updates:
    • Update filings if there are changes in beneficial ownership.

Documents Required

For Foreign Nationals



Features

Features & Benefits of Filing of Beneficial Ownership

Mandatory for SBOs

Required for individuals meeting the SBO criteria.

Focus on Transparency

Aims to uncover hidden ownership structures.

Compliance Forms

Includes Form BEN-1, BEN-2, and maintenance of the BEN-3 register.

Event-Based Filing

Companies must file whenever ownership changes occur.

Digital Filing

Completed online through the MCA portal.

Regulatory Oversight

Ensures compliance with ROC and MCA guidelines.

Penalty for Non-Compliance

Companies and SBOs face fines for failure to disclose or file.

Audit-Ready Documentation

Helps maintain records for statutory audits.

Alignment with Global Standards

Supports international efforts to combat financial crimes.

Applicable Across Industries

Relevant to companies in all sectors.



Comparison with Related Services

Feature Beneficial Ownership Filing Corporate Compliance KYC Compliance
Objective Disclose ultimate ownership Ensure governance Verify customer identity
Applicability SBOs in companies All registered companies All businesses onboarding clients
Regulatory Body MCA/ROC MCA RBI/SEBI/IRDAI
Filing Frequency Event-based Annually/Event-based Periodic
Penalty for Non-Compliance High High High


Frequently Asked Questions

What is a Significant Beneficial Owner (SBO)?

An SBO is an individual who holds at least 10% of shares, voting rights, or dividend rights, or controls the company through indirect means.

Who is responsible for filing Form BEN-2?

The company is responsible for filing Form BEN-2 with the ROC after receiving declarations from SBOs.

What are the penalties for non-compliance?

Penalties include fines of up to ₹50,000 for the company and additional daily fines of ₹1,000 for ongoing defaults.

Is Form BEN-2 filing mandatory for all companies?

It is mandatory for private and unlisted public companies, except public sector companies.

What is the purpose of the BEN-3 register?

BEN-3 is maintained by the company to record the details of its SBOs for regulatory and internal reference.

Can an SBO file BEN-1 on their own?

No, SBOs must submit BEN-1 to the company, which then files BEN-2 with the ROC.

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