The Ministry has altered Section 90 and introduced the Concept of significant beneficial owner under the Companies Amendment Act, 2017 w.e.f. 13.06.2018. Significant Beneficial Owner is a new concept introduced with the intent to find out the actual owner of the Company. Therefore, any person holding shares on behalf of the other is mandatorily required to give a declaration to the Company stating on whose behalf he is holding the shares. This will help to reduce layers between the actual shareholders and the person who is depicted as the shareholder in the register of members.

Section 90 : Register of Significant Beneficial Owner in a Company

Under this, the existing Section has been replaced with new Provision relating to Disclosure of Beneficial Interest. New rules has been framed as “Companies (Significant Beneficial Owners) Rules, 2018. The highlights of the new Provision of the Sections and Rules are:

1. As per Rule 2(1)(e) of the Companies (Significant  Beneficial Owners) Rule, 2018, “Significant Beneficial Owner” means an individual referred to in sub-section (1) of section 90 (holding ultimate beneficial interest of not less than 10%) read with sub-section 10 of section 89, but whose name is not entered in the register of members of a company as the holder of such shares, and the term ‘significant beneficial ownership’ shall be construed accordingly, However, further explains that in case of persons other than individuals or natural persons, Significant beneficial owner shall be determined as under:

   Nature of Person who is a member	Significant Beneficial owner
   i)     Company	is the natural person, who, whether acting alone or together with other natural persons, or through one or more other persons or trusts, holds not less than 10% share capital of the company or who exercises significant influence or control in the company through other means
   ii)    Partnership Firm	is the natural person, who, whether acting alone or together with other natural persons, or through one or more other persons or trusts, holds not less than 10% of capital or has entitlement of not less than 10% of profits of the partnership
   iii) In (i) and (ii) above no natural person is identified	relevant natural person who holds the position of senior managing official
   iv) Trust	include identification of the author of the trust, the trustee, the beneficiaries with not less than 10% interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership

   Further, it is explained that instruments in the form of global depository receipts, compulsorily convertible preference shares or compulsorily convertible debentures shall be treated as ‘shares’ for the purpose of this clause;
2. Every individual, acting alone or together, or through one or more person or trust, including trust and a person resident outside India, holds the beneficial interest of not less than 10% shall make a declaration in Form No. BEN-1 to the Company in which he holds significant interest within 90 days of the commencement of the Act and within 30 days in case of a change in his significant beneficial ownership. Every individual, who, after the commencement of these rules, acquires/change of beneficial ownership shall make a declaration within 30 days of acquisition or change. [Section 90(1) read with Rule 3]
3. Where any declaration is received by the Company, it shall file a return in Form No. BEN-2 to the Registrar within 30 days of receipt of Declaration along with prescribed fees. [Section 90(4) read with Rule 4]
4. The  Company shall maintain a register of beneficial ownership and change therein, including Name of the individual, his date of Birth, address, details of ownership etc. as mentioned in Form No. BEN-3. [Section 90(2) read with Rule 5]
5. The register shall be open for inspection during business hours, at such reasonable time of not less than two hours, on every working day as the board may decide, by any member of the company on payment of such fee as may be specified by the company but not exceeding fifty rupees for each inspection. [Section 90(3) read with Rule 5]
6. A Company shall give notice seeking information in Form No. BEN-4 to the person, whom the company knows or has reasonable cause to believe—
   • to be a significant beneficial owner of the company;
   • to be having knowledge of the identity of a significant beneficial owner or another person likely to have such knowledge; or
   • 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. [Section 90(5) read with Rule 7]
7. The information required by the notice shall be given by the concerned person within a period not exceeding thirty days of the date of the notice. [Section 90(6) read with Rule 7]
8. The Company shall apply to the Tribunal within a period of 15 days of the expiry of the period specified in the notice:
   • where that person fails to give the company the information required by the notice within the time specified therein; or
   • where the information is given is not satisfactory, 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. [Section 90(7) read with Rule 7]
9. 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 60 days of receipt of the application or such other period as may be prescribed. [Section 90(8) read with Rule 7]
10. 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). . [Section 90(9) ]
11. If any person fails to make a declaration as required under sub-section (1), he shall be punishable with fine which shall not be less than Rs. 1,00,000/- but which may extend to Rs. 10,00,000/- and where the failure is a continuing one, with a further fine which may extend to Rs. 1,000/-  for every day after the first during which the failure continues. . [Section 90(10)]
12. If a company, required to maintain register under sub-section (2) and file the information under sub-section (4), 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. . [Section 90(11)]
13. 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. [Section 90(12)]
14. These rules are not made applicable to the holding of shares of companies/body corporates, in case of pooled investment vehicles/investment funds such as Mutual Funds, Alternative Investment Funds (AIFs), Real Estate Investment Trusts(REITs) and Infrastructure Investment Trusts (lnvlTs) regulated under SEBI Act. [Rule 8]

Conclusion: The introduction of this section will not only help to curb layering of holding but also will help to identify the true owner of the Company. Also moving ahead, dematerialisation of physical shares is being mandatorily implemented on Companies. This will help to lift the veil and expose the face of the actual owner and promoter of the Company and control malafide transactions. Further, the penalty has been imposed not only on the  Company but also all the person who wilfully furnishes false or incorrect information.