Register of Significant Beneficial Owners (SBO)

# Register of Significant Beneficial Owners [Section 90]

## Who is a Significant Beneficial Owner (SBO)?

An individual who, either indirectly or both directly and indirectly, exercises rights in a reporting company (alone or together with others) by:

• Holding not less than 10% shares, or
• Holding not less than 10% voting rights, or
• Right to receive 10% dividend or other distribution, or
• Right to exercise significant influence — i.e., power to participate in financial & operating policy decisions.

### Crucial Conditions

• SBO must be an individual (not body corporate).
• Individual must hold shares indirectly OR directly + indirectly [pure direct holding does NOT make one an SBO].
• Direct holding: Person holds shares in his own name or has declared himself as beneficial owner.

## Reporting Company's Duty

The company must identify the SBO and cause him to make declaration.

### Notice (Form BEN-4)

Company shall give notice in Form BEN-4 to a person who:

• Is not registered as SBO, AND company knows/believes him to be:
• An SBO, OR
• Having knowledge of SBO or likely to know one, OR
• Was SBO during the 3 years preceding the date of notice.

The person must respond within 30 days of notice.

## Application to NCLT

If the person fails to give information or information is unsatisfactory:

• Company shall apply to NCLT within 15 days of expiry of period.
• NCLT (after hearing) may pass order within 60 days for:
• Restriction on transfer,
• Suspension of rights (dividend, voting),
• Other prescribed matters.
• Person aggrieved may seek relaxation within 1 year of order.
• If not filed within 1 year → shares transferred to IEPF.

## SBO's Declaration

• Individual becoming SBO (or whose SBO status changes) → file Form BEN-1 with reporting company within 30 days.
• Company files return in Form BEN-2 with ROC within 30 days of receipt.

## Register of SBO

• Company maintains register in Form BEN-3.
• Open for inspection by any member during business hours (≥2 hours/day on working day).
• Fees: maximum ₹50 per inspection.

## Exemptions [Companies (SBO) Rules, 2018]

Provision not applicable if shares of reporting company are held by:

• Holding company (if reported in BEN-2)
• CG, SG or local authority
• Reporting company / body corporate / entity controlled by CG/SG
• IEPF
• SEBI-registered investment vehicles — Mutual Funds, AIFs, REITs, InVITs
• Investment vehicles regulated by RBI, IRDAI or PFRDA

## Penalties

Not applicable to Government Company (if no default u/s 92 & 137).