Amended and updated notes on section 90 of Companies Act 2013. Detail discussion on provisions and rules related to register of significant beneficial owners in a company.
Chapter VII (Sections 88–122) of the Companies Act, 2013 (CA 2013) deals with the provisions related to management and administration. Section 90 of CA 2013 provides for register of significant beneficial owners in a company.
Recently, we have discussed in detail section 89 (Declaration in respect of beneficial interest in any share) of CA 2013. Today, we learn the provisions of section 90 of Companies Act 2013 read with the Companies (Management and Administration) Rules, 2014.
Section 90 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 90 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. | 90 |
| Section Name | Register of significant beneficial owners in a company |
| Monthly Updated Edition | Company Law PDF |
Section 90 (Register of significant beneficial owners in a company) of Companies Act 2013
Section 90(1):
Section 90(1) Significant Beneficial Owner: Significant Beneficial Owner (SBO) is every individual who acting:
- alone or together, or
- through one or more persons or trust, including
a trust and persons resident outside India,
- holds beneficial interests of 10% or more (as prescribed in Rules) in shares of a company; or
- holds the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company
Such significant beneficial owner shall make a declaration in Form No. BEN-1 to the company.
CG may exempt prescribed class of persons from complying the provisions of Section 90(1) of the Companies Act, 2013.
Section 90(2):
Section 90(2) Register of SBO: Every company shall maintain a register of SBO in Form No. BEN-3 including the name of individual, his date of birth, address, details of ownership in the company and such other prescribed details.
Section 90(3):
Section 90(3) Inspection of SBO Register: The register of SBO maintained in Form No. BEN-3 shall be open to inspection by any member of the company on payment of specified fees by the company but not exceeding ₹50.
Section 90(4):
Section 90(4) Filing of SBO Return: Every company shall file a return of SBO in Form No. BEN-2 and changes therein with the Registrar containing names, addresses and other prescribed details within 30 days from the date of receipt of declaration in Form No. BEN-1.
Section 90(4A):
Section 90(4A) Identify SBO: Every company shall take necessary steps to identify SBO in relation to the company and require him to comply with the provisions of section 90.
Note that sub-section(4A) of section 90 was inserted by the Companies (Amendment) Act, 2019 with effect from 15th August 2019.
Section 90(5):
Section 90(5) Notice seeking info of SBO: A company shall give notice in Form No. BEN-4 to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe—
(a) to be a SBO of the company;
(b) to be having knowledge of the identity of a SBO or another person likely to have such knowledge; or
(c) to have been a SBO at any time during the 3 years immediately preceding the date on which the notice is issued,
and who is not registered as a SBO with the company as required under section 90.
Section 90(6):
Section 90(6) Info by Not Registered SBO: The information required by the notice in Form No. BEN-4 shall be given by the concerned person within 30 days of the date of such notice.
Section 90(7):
Section 90(7) Application to Tribunal: The company shall apply to the Tribunal,
(a) where any person fails to give info required by notice in Form No. BEN-4; or
(b) where the information given is not satisfactory,
Such application shall be made within 15 days of the expiry of period as specified in the notice. Company apply to Tribunal for an order directing that the shares in question be subject to restrictions with regard to
- Transfer of interest,
- Suspension of all rights (including dividend rights, voting rights) attached to the shares; and
- Other prescribed matters.
Section 90(8):
Section 90(8) Tribunal Order: After giving an opportunity of being heard, the Tribunal may make such order restricting the rights attached with the shares within 60 days of receipt of application u/s 90(7).
Section 90(9):
Section 90(9) Aggrieved Person: The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under u/s 90(8), within one year from the date of such order.
If no such application has been filed within 1 year such shares shall be transferred without any restrictions to the authority constituted u/s 125(5) in prescribed manner.
Sub-section (9) of section 90 was substituted by the Companies (Amendment) Act, 2019 with effect from 2nd November 2018.
Section 90(9A):
Section 90(9A) CG Make Rules: The CG may make rules for the purposes of section 90.
Note that sub-section(9A) of section 90 was inserted by the Companies (Amendment) Act, 2019 with effect from 15th August 2019.
Section 90(10):
Section 90(10) Punishment to SBO: If any person fails to make a declaration required u/s 90(1) in Form No. BEN-1, he shall be punishable with:
- Imprisonment up to one year; or
- Fine of Min ₹1 Lakh and Max ₹10 Lakh; or
- Both
Note that if the failure is a continuing one, then that person shall be punishable with a further fine up to ₹1000 for every day after the first during which the failure continues.
Section 90(11):
Section 90(11) Punishment to Company: If a company, required to maintain register u/s 90(2) and file the information u/s 90(4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company and every officer of the company who is in default shall be punishable with:
- Fine of Min ₹10 lakh – Max ₹50 lakh; and
Where the failure is a continuing one, with a further fine of ₹1000 for every day after the first during which the failure continues.
The words “or required to take necessary steps under sub-section (4A)” of section 90(11) was inserted by the Companies (Amendment) Act, 2019 with effect from 15th August 2019.
Section 90(12):
Section 90(12) Punishment for False Information: If any person wilfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration u/s 90(1) in Form No. BEN-1, he shall be liable to action u/s 447.
Punishment under section 447: As per section 447 of the Companies Act 2013, any person who is found to be guilty of fraud involving an amount of at least ₹10 lakh or 1% of the turnover of the company, whichever is lower, shall be punishable with imprisonment for Min 6 months and Max 10 years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud.
Note that if the fraud in question involves public interest, the term of imprisonment shall not be less than 3 years. However, if the fraud involves an amount less than ₹10 lakh rupees or 1% of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment up to 5 years or with fine up to ₹50 lakh or with both.
Section 90 of Companies Act 2013: Register of significant beneficial owners in a company
Section 90 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.
(1) Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent. or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company (herein referred to as “significant beneficial owner”), shall make a declaration to the company, specifying the nature of his interest and other particulars, in such manner and within such period of acquisition of the beneficial interest or rights and any change thereof, as may be prescribed:
Provided that the Central Government may prescribe a class or classes of persons who shall not be required to make declaration under this sub-section.
(2) Every company shall maintain a register of the interest declared by individuals under sub-section (1) and changes therein which shall include the name of individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed.
(3) The register maintained under sub-section (2) shall be open to inspection by any member of the company on payment of such fees as may be prescribed.
(4) Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed.
(4A) Every company shall take necessary steps to identify an individual who is a significant beneficial owner in relation to the company and require him to comply with the provisions of this section.
(5) A company shall give notice, in the prescribed manner, to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe—
- (a) to be a significant beneficial owner of the company;
- (b) to be having knowledge of the identity of a significant beneficial owner or another person likely to have such knowledge; or
- (c) to have been a significant beneficial owner of the company at any time during the three years immediately preceding the date on which the notice is issued,
and who is not registered as a significant beneficial owner with the company as required under this section.
(6) The information required by the notice under sub-section (5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice.
(7) The company shall,—
- (a) where that person fails to give the company the information required by the notice within the time specified therein; or
- (b) where the information given is not satisfactory,
- apply to the Tribunal within a period of fifteen days of the expiry of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest,
suspension of all rights attached to the shares and such other matters as may be prescribed.
(8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of sixty days of receipt of application or such other period as may be prescribed.
(9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year from the date of such order:
Provided that if no such application has been filed within a period of one year from the date of the order under sub-section (8), such shares shall be transferred, without any restrictions, to the authority constituted under sub-section (5) of section 125, in such manner as may be prescribed.
(9A) The Central Government may make rules for the purposes of this section.
(10) If any person fails to make a declaration as required under sub-section (1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees or with both but which may extend to ten lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.
(11) If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than ten lakh rupees but which may extend to fifty lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.
(12) If any person wilfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration made under this section, he shall be liable to action under section 447.