CLL_Art3705 - Taxpublishers.in

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The Tax Publishers Companies Act, 2013 Significant Beneficial Ownership : A New Paradigm Pragya Lalwani The learned author, in this piece of writing, has penned down the facets of significant beneficial owner of the company and reporting requirements attributable to identifying his significant beneficial ownership. 1. Opening note The notion Significant Beneficial Ownership came into existence with the introduction of the Companies (Amendment) Act, 2017. Section 90 which dealt with the investigation of beneficial interest of shares in certain cases has been substituted and introduced as a section regarding register of significant beneficial owners in a company. In that respect, the Companies (Significant Beneficial Owners) Rules, 2018 have also been issued by the MCA with further amendments dt.8-2-2019 that would help in clarifying the provisions and compliance requirements to be made on acquiring status of significant beneficial owner. This concept brought in by Government, would facilitate in revealing and identifying the veiled real owners. 2. Meaning of significant beneficial owner Every individual who is acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India and 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 section 2(27), over the company has been referred to as a significant beneficial owner of such company.[Section 90(1)]. According to rule 2(1)(h), inserted vide the Companies (Significant Beneficial Owners) Amendment Rules, 2019, significant beneficial owner in relation to a reporting company means an individual referred to above, acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, i.e.:-- (i) he holds indirectly, or together with any direct holdings, not less than ten per cent of the (a) shares, or (b) voting rights in the shares; (ii) he has a right to receive or participate in not less than ten per cent of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings; (iii) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Companies Act, 2013

Significant Beneficial Ownership : A New Paradigm

Pragya Lalwani

The learned author, in this piece of writing, has penned down the facets of significant beneficial owner of the company and reporting requirements attributable to identifying his significant beneficial ownership.

1. Opening note

The notion Significant Beneficial Ownership came into existence with the introduction of the Companies (Amendment) Act, 2017. Section 90 which dealt with the investigation of beneficial interest of shares in certain cases has been substituted and introduced as a section regarding register of significant beneficial owners in a company. In that respect, the Companies (Significant Beneficial Owners) Rules, 2018 have also been issued by the MCA with further amendments dt.8-2-2019 that would help in clarifying the provisions and compliance requirements to be made on acquiring status of significant beneficial owner. This concept brought in by Government, would facilitate in revealing and identifying the veiled real owners.

2. Meaning of significant beneficial owner

Every individual who is acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India and 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 section 2(27), over the company has been referred to as a significant beneficial owner of such company.[Section 90(1)].

According to rule 2(1)(h), inserted vide the Companies (Significant Beneficial Owners) Amendment Rules, 2019, significant beneficial owner in relation to a reporting company means an individual referred to above, acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, i.e.:--

(i) he holds indirectly, or together with any direct holdings, not less than ten per cent of the (a) shares, or (b) voting rights in the shares;

(ii) he has a right to receive or participate in not less than ten per cent of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;

(iii) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone.