# Declaration of Beneficial Interest in Shares — Section 89

When the registered owner of shares is different from the beneficial owner, the law requires disclosure to prevent misuse of nominee/benami holdings.

## Three Declarations Required

Who	Timeline	Form
Registered owner (who doesn't hold beneficial interest)	Within 30 days of entry of his name in Register of Members	MGT-4
Beneficial owner	Within 30 days of acquiring beneficial interest	MGT-5
Company files with ROC	Within 30 days of receipt of declaration	MGT-6

## Special Cases

IFSC Public/Private Company: Return shall be filed with ROC within 60 days (instead of 30).
Exemption: Return not required for trust created to set up a Mutual Fund, Venture Capital Fund or other Fund approved by SEBI.

## Consequences of Non-Declaration

Beneficial owner cannot enforce any right in respect of those shares against the company.
No prejudice to obligation of the company to pay dividends to registered owner.

## Penalty

For person failing to file declaration: ₹50,000 + ₹1,000 per day continuing default (max ₹5 lakh for individual; ₹2 lakh for company in default).

Worked example

### Example 1

Example: Mr. A holds 1,000 shares of XYZ Ltd. as a nominee for Mr. B, who is the actual beneficial owner. Mr. A's name was entered in the Register of Members on 1st June 2026. Solution: (i) Mr. A must file Form MGT-4 by 30 June 2026 declaring he holds shares as nominee. (ii) Mr. B must file Form MGT-5 by 30 June 2026. (iii) XYZ Ltd. must file Form MGT-6 with ROC within 30 days of receipt of declarations.

### Example 2

Example — Consequence: If neither Mr. A nor Mr. B files the declaration, Mr. B cannot enforce voting rights or any other shareholder right against the company. However, dividend is still payable to Mr. A (registered owner).

⚠️ Common exam mistakes

Confusing MGT-4 (registered owner declaration), MGT-5 (beneficial owner declaration), and MGT-6 (company's return to ROC).
Forgetting that the IFSC company gets 60 days instead of 30 days.
Believing non-declaration invalidates the dividend — it only bars enforcement of rights by the beneficial owner.

Bare-Act text Section 89 · The Companies Act, 2013 · click to expand

89. (1) Where the name of a person is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares, such person shall make a declaration within such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares. (2) Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed.

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Declaration of Beneficial Interest (Section 89)

Worked example

⚠️ Common exam mistakes