Amended and updated notes on section 89 of Companies Act 2013. Detail discussion on provisions and rules related to declaration in respect of beneficial interest in any share.
Chapter VII (Sections 88–122) of the Companies Act, 2013 (CA 2013) deals with the provisions related to management and administration. Section 89 of CA 2013 provides for declaration in respect of beneficial interest in any share.
Recently, we have discussed in detail section 88 (Register of members, etc.) of CA 2013. Today, we learn the provisions of section 89 of Companies Act 2013 read with the Companies (Management and Administration) Rules, 2014.
Section 89 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 902(E) issued dated 27.03.2014. This notification shall come into force from 1st April, 2014 i.e. the commencement date of section 89 is 1-04-2014.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | VII |
| Chapter Name | Management and Administration |
| Section No. | 89 |
| Section Name | Declaration in respect of beneficial interest in any share |
| Monthly Updated Edition | Company Law PDF |
Section 89 of Companies Act 2013: Declaration in respect of beneficial interest in any share
Section 89 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014 and last amendment is effective from 22nd January, 2021.
Section 89(1) of Companies Act
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.
Section 89(2) of Companies Act
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.
Section 89(3) of Companies Act
Where any change occurs in the beneficial interest in such shares, the person referred to in sub-section (1) and the beneficial owner specified in sub-section (2) shall, within a period of thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed.
Section 89(4) of Companies Act
The Central Government may make rules to provide for the manner of holding and disclosing beneficial interest and beneficial ownership under this section.
Section 89(5) of Companies Act
If any person fails to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.
[Sub-section (5) of section 89 has been substituted w.e.f. 21.12.2020 by the Companies (Amendment) Act, 2020]
Section 89(6) of Companies Act
Where any declaration under this section is made to a company, the company shall make a note of such declaration in the register concerned and shall file, within thirty days from the date of receipt of declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with such fees or additional fees as may be prescribed.
Section 89(7) of Companies Act
If a company, required to file a return under sub-section (6), fails to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be liable to a penalty of one thousand rupees for each day during which such failure continues, subject to a maximum of five lakh rupees in the case of a company and two lakh rupees in case of an officer who is in default.
[Sub-section (7) of section 89 has been substituted w.e.f. 21.12.2020 by the Companies (Amendment) Act, 2020]
Section 89(8) of Companies Act
No right in relation to any share in respect of which a declaration is required to be made under this section but not made by the beneficial owner, shall be enforceable by him or by any person claiming through him.
Section 89(9) of Companies Act
Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend to its members under this Act and the said obligation shall, on such payment, stand discharged.
Section 89(10) of Companies Act
For the purposes of this section and section 90, beneficial interest in a share includes, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to—
- (i) exercise or cause to be exercised any or all of the rights attached to such share; or
- (ii) receive or participate in any dividend or other distribution in respect of such share.
Section 89(11) of Companies Act
The Central Government may, by notification, exempt any class or classes of persons from complying with any of the requirements of this section, except sub-section (10), if it is considered necessary to grant such exemption in the public interest and any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.
[Sub-section (11) of section 89 has been inserted w.e.f. 22.01.2021 by the Companies (Amendment) Act, 2020 vide MCA Notification No. S.O. 325(E) issued dated 22.01.2021]
Exception/ Modification/ Adaptation:
1) In case of Government company – Section 89 shall not apply. – Notification No. G.S.R. 463(E) dated 5th June, 2015.
2) In case of a Specified IFSC public company, in sub-section (6) of section 89, for the words “thirty days” read as “sixty days”. –Notification No. G.S.R. 08(E) dated 4th January, 2017.
3) In case of a Specified IFSC private company, in sub-section (6) of section 89, for the words “thirty days” read as “sixty days”. –Notification No. G.S.R. 09(E) dated 4th January, 2017.