## Declaration of Beneficial Interest in Shares – Section 89

### What is Beneficial Interest?

A beneficial interest in a share is the right to enjoy the benefits of share ownership even though the legal title (the name on the register of members) belongs to someone else. The person whose name is on the register is the registered owner; the person enjoying the benefits is the beneficial owner.

For Sections 89 and 90, beneficial interest includes (directly or indirectly, through any contract, arrangement or otherwise) the right or entitlement of a person (alone or with others) to –

(i) exercise (or cause to be exercised) any or all rights attached to the share; or

(ii) receive or participate in any dividend or other distribution in respect of the share.

### Who has to declare what?

Person	Declaration
Registered member NOT holding beneficial interest	Must declare to the company that he/she does not hold beneficial interest.
Beneficial owner (not registered as member)	Must declare nature of interest and other particulars to the company.
Both	Must declare any change in such beneficial interest.

### Central Government's Power to Exempt

The Central Government may, by notification, exempt any class of persons from complying with Section 89, either unconditionally or subject to conditions, if considered necessary in the public interest.

### Why it Matters

The section ensures transparency of true ownership. Without it, layered ownership structures could be used to conceal the real persons exercising control or receiving dividends – which has implications for taxation, regulatory oversight, and anti-money-laundering compliance. It complements Section 90 (Significant Beneficial Owners).

Worked example

### Example 1

Example 1: Mr. A holds 1,000 shares of XYZ Ltd. in his own name but on behalf of Mr. B (the beneficial owner). Mr. A must declare to the company that he is not the beneficial owner; Mr. B must declare to the company that he is the beneficial owner. The company must in turn file the requisite return with the ROC.

### Example 2

Example 2: Mr. B (in the above example) transfers his beneficial interest to Mr. C. Both Mr. B and Mr. C must intimate the company of the change in beneficial interest.

⚠️ Common exam mistakes

Believing that only the beneficial owner needs to file the declaration – the registered (legal) holder must also file his declaration.
Confusing Section 89 (declaration of beneficial interest in any share) with Section 90 (significant beneficial owner – the SBO regime with the 10% threshold).
Overlooking the obligation to declare changes – the obligation is not a one-time filing.
Assuming exemptions are automatic – Central Government must issue a notification.

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

Section 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.

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Declaration in Respect of Beneficial Interest in Shares (Section 89)

Worked example

⚠️ Common exam mistakes