Form BEN-2 – Applicability & Due Date
The Companies Act of 2013 introduced Form BEN-2 by way of an important document to bring more clarity to Indian businesses. It asks companies to share details about Significant Beneficial Owners (SBOs) that brings under its ambit any person or group who control a large share in a firm, whether in an outright manner or through others. Such an approach exposes the actual controllers of companies. It interprets possession and makes it very understandable for the regulators.
Information Essential to Understand Form BEN-2
Form BEN-2 is a file which is mandatory under the Companies Act 2013. The act mandates every company to file a return divulging their Significant Beneficial Owners, or SBOs, with the Registrar of Companies. This form is meant to identify people or groups who have sway over a company. These people may be able to exercise such power, under such circumstances, via the possession of shares or the control of voting rights.
It emphasizes the people who directly or indirectly own or control at least 10% of the shares or the voting rights of the company. This document is instrumental in the facilitation of transparency in the ownership makeup by unveiling the identity of those having the most dominant impact in the firm. It must be filed per the 30-day term where significant beneficial ownership is acquired or any modifications to current preoccupations.
Overview of a Significant Beneficial Owner (SBO)
The Companies Act of 2013 refers to the Significant Beneficial Owner in section 90(1). This person, either by themselves or working with others, or even through other people or trusts, holds certain rights or privileges in the company that’s filing the report.
- Holds indirectly, or in combination with any explicit holdings, more than or equal to 10% of the shares
- Owns directly, or together with any explicit holdings, over or equal to 10% of the voting rights in the shares
- Has authority to get or participate in over or equal to 10% of the total shareable dividend, or any separate sharing, in a financial year through indirect holdings alone, or in conjunction with any direct holdings;
Possesses the following: –
Right to exercise, or really exercises;
- Substantial influence or control, by any way other than via direct holdings alone
- Significant (Indirect) Control: Control by owners through one or more layers of companies in the Reporting Company.
- Significant (Indirect) Influence: Owner affects those enterprises that have a bearing on the Reporting Company.
Form BEN 2 – Applicability
Form BEN-2 filing is applicable to all companies that include Significant Beneficial Owners (SBOs). Nonetheless, Section 90 of the Companies Act 2013 presents exemptions for specific transactions.
Exemptions from Filing Form BEN 2
Form BEN-2 is commonly needed for companies to unveil details relating to their Significant Beneficial Owners (SBOs). However, some transactions and ownership types do not need to be filed as needed within Section 90 of the Companies Act 2013:
- Executors, Trustees, and Administrators: Shares or rights retained as a trustee, executor, or administrator need not be filed.
- Regulated Investment Vehicles: Shares owned by investment vehicles like venture capital funds, mutual funds, and other entities controlled by SEBI.
- Foreign Nominee Shareholders: Rights or shares held by nominee shareholders in lieu of foreign entities in pursuance of foreign investment regulations.
- Court Orders: Transactions encompassing the transfer of shares or rights under a court order or decree.
- Corporate Structures: SBOs owning shares through different body corporates or within an organization composed of subsidiaries and holding companies.
Non-Applicability of Filing Form BEN 2
Apart from the above exemptions, there are certain entities for whom the need to file Form BEN-2 does not apply at all:
- SEBI Registered Investment Vehicles: Those are the entities like REITs, mutual funds, AiFs, and InvITs that are regulated by the Securities and Exchange Board of India (SEBI).
- Investor Education and Protection Fund Authority (IEPF): The IEPF Authority holding stock.
- Government and Regulatory Organizations: This involves stocks owned explicitly by the Central or State Governments, local administrators, or any subordinate groups.
- Other Regulatory Bodies: These are entities that are guarded by groups like the Insurance Regulatory and Development Authority of India, the Reserve Bank of India, or the Pension Fund Regulatory and Development Authority.
When to File Form BEN-2
Based on Rule 4 of the Companies (Significant Beneficial Owners) Rules, 2018, you need to file Form BEN-2 with the Registrar. You have 30 days from when you get Form BEN-1 to do this. The MCA had stretched the earlier timeline first without imposing fees to provide relief to companies during the transition.
The return in e-Form BEN-2 comprises a proclamation by a corporation about the people or else entity owning 10% or more shares in the corporation or voting rights. On the receipt of a communication by way of the Corporation in Form BEN-1, the corporation needs to file Form BEN-2 within thirty days from the receipt of the declaration by the SBO towards the corporation in Form BEN-1. The SBO is needed for filing their declaration for the first time within ninety days from 8th February 2019.
Fees for Filing Form BEN-2 to ROC
The following are the details of fees under different circumstances:
In the case of a company with share capital
| Nominal Share Capital | Fees Applicable |
| Up to Rs 1,00,000 | Rs 200 |
| From Rs 1,00,000 to Rs 4,99,999 | Rs 300 |
| From Rs 5,00,000 to Rs 24,99,999 | Rs 400 |
| From Rs 25,00,000 to Rs 99,99,999 | Rs 500 |
| Greater than or equal to Rs 1,00,00,000 | Rs 600 |
With regard to a company without share capital – Fee applicable – Rs 200
Additional fee rules
| Period of Delays | Extra Fees Applicable |
| Till 30 Days | 2x Normal Fees |
| Above 30 Days and till 60 Days | 4x Normal Fees |
| Above 60 Days and till 90 Days | 6x Normal Fees |
| Above 90 Days and till 180 Days | 10x Normal Fees |
| Above 180 Days | 12x Normal Fees |
Wrapping Up
Using form BEN-2 is really important, and we shouldn’t overlook it. It helps make things clear and follows the legal rules from the Companies Act 2013. This Act seeks to expose the actual beneficial owners of Indian companies. It is a regulation that is binding on companies and other entities except for those that are wholly owned by the government where there are no third-party beneficiaries over the set limit. Prompt filing of Form BEN-2 is not only a mandatory requirement but a proactive step in the direction of corporate governance and accountability.
Understanding the deadlines – whether it is 30 days from the day the Form BEN-1 is received or according to the latest MCA notifications – is very important in order to stay away from fines as well as to maintain compliance with the regulations. It is very important for companies to be always vigilant in relation to changes in their ownership framework and at the same time, they should make sure that the reports are sent to the Registrar of Companies on time.
Essentially, Form BEN-2 is more than a compliance form; it’s a security for corporate transparency.