# Investigation of Beneficial Ownership — Significant Beneficial Owner (Section 90)
(As amended by the Companies (Significant Beneficial Owners) Amendment Rules, 2019)
## 1. Who is a Significant Beneficial Owner (SBO)?
An SBO is an individual who, acting alone or together, or through one or more persons or trust, possesses any one of the following rights/entitlements in the Reporting Company:
| Criterion | Threshold |
|---|---|
| Shares held indirectly (alone or with direct holding) | ≥ 10% |
| Voting rights held indirectly (alone or with direct holding) | ≥ 10% |
| Right to receive/participate in distributable dividend or other distribution through indirect holding (alone or with direct holding) | ≥ 10% |
| Has the right to exercise or actually exercises significant influence or control otherwise than through direct holdings alone | — |
### Significant Influence
Power to participate, directly or indirectly, in financial and operating policy decisions of the reporting company — but it is not control or joint control of those policies.
## 2. Direct vs Indirect Holding
### Direct Holding (individual is NOT an SBO if holding is only direct):
An individual holds rights/entitlement directly if:
1. Shares are held in the name of such individual; OR
2. The individual has acquired beneficial interest under Section 89 and has filed a declaration with the company.
### Indirect Holding (triggers SBO)
Arises when the shareholder is one of the following:
- Body Corporate
- Hindu Undivided Family
- Partnership
- Trust
- Pooled Investment Vehicle
Mnemonic: BHPTP
## 3. Declaration by SBO (Form BEN-1)
| Situation | Timeline |
|---|---|
| Existing SBO on commencement of 2019 Rules | File BEN-1 within 90 days of commencement |
| Becoming SBO subsequently / change in SBO status | File BEN-1 within 30 days |
| Person becoming SBO within 90 days of commencement | Deemed to become SBO on expiry of 90 days; the 30-day window runs from that deemed date |
Reporting Company files Form BEN-2 with ROC within 30 days of receiving BEN-1.
## 4. Duty of the Reporting Company
- Identify SBOs and cause them to declare.
- Issue notice in Form BEN-4 to any person whom the company knows or has reason to believe:
1. is an SBO; or
2. has knowledge of identity of an SBO; or
3. has been an SBO at any time during the 3 years preceding the notice and is not registered as such.
- Maintain Register of SBO in Form BEN-3 open for inspection during business hours for not less than 2 hours on every working day. Fee for inspection ≤ ₹50.
## 5. Application to Tribunal
The company shall apply to the Tribunal within 15 days of expiry of the period specified in BEN-4 notice if:
- The person fails to give information within 30 days of notice; or
- Information given is unsatisfactory.
The Tribunal may, after hearing parties, within 60 days of receipt of the application (or such other period as may be prescribed), order restrictions on:
- Transfer of shares
- Suspension of right to receive dividend/distribution
- Suspension of voting rights
- Any other restrictions
Relief: Aggrieved party may apply for relaxation/lifting within 1 year of the order. If no application within 1 year, shares transferred without restrictions to authority under Section 125 (IEPF).
## 6. Non-Applicability of SBO Rules
The SBO Rules do NOT apply where shares are held by:
1. IEPF Authority
2. Holding company that has complied with Section 90 (details reported in BEN-2)
3. Central/State Government or any local authority
4. Body corporate wholly/partly controlled by Central/State Government
5. Investment vehicles — Mutual Funds, AIFs, REITs, InVITs registered with SEBI
6. Investment vehicles regulated by RBI / IRDAI / PFRDA
## 7. Penalties under Section 90
| Default | Penalty |
|---|---|
| Any person fails to make SBO declaration | Fine ₹50,000 + up to ₹1,000/day (continuing), max ₹2,00,000 |
| Wilfully furnishes false / suppresses material info | Liable to action under Section 447 (Fraud) |
| Company fails to maintain register / file information / denies inspection | Company: ₹1,00,000 + ₹500/day, max ₹5,00,000; Officer in default: ₹25,000 + ₹200/day, max ₹1,00,000 |
## 8. Government Company Exemption
Section 90 shall not apply to a Government Company that has not committed default in filing financial statements (Section 137) or annual return (Section 92).
## Forms Map — Quick Recall
| Form | Used for |
|---|---|
| BEN-1 | SBO declares to Reporting Company |
| BEN-2 | Reporting Company files return with ROC |
| BEN-3 | Register of SBO maintained by company |
| BEN-4 | Notice issued by company to suspected SBO |