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India – New regulation for Significant Beneficial Owner (“SBO”)

  • United Kingdom
  • India
  • Corporate secretarial services

08-03-2019

The amendment to section 90 of the Companies Act 2013 and the corresponding Rules is now applicable and has been made effective for all companies by the Ministry of Corporate Affairs of India (MCA) on 8 February, 2019.

This update provides clarifications concerning the meaning of the term “Significant Beneficial Owner” and its criteria for applicability. Its previous definition has been substituted with a new one.

Who is the “Significant Beneficial Owner” under this new regulation?

According to the previously mentioned section, for companies registered under the Companies Act, the SBO is “the individual who alone or together with other natural person or through one or more other persons or trusts”:

a) holds not less than 10% of its shares;

b) holds not less than 10% of its voting rights;

c) has the right to receive or participate in the dividend or any other distribution payable in a financial year;

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

If it’s not possible to identify a SBO:

The Company will need to send the applicable form to its immediate shareholder(s) and if it’s not possible to identify a SBO, the shareholder(s) need to send a declaration to the Company confirming so and no filing is required.

If the SBO is identified:

The Company will need to send the applicable form to its immediate shareholder(s) and each SBO and the Company must file the applicable form(s) in the proper time and manner.

If the SBO is a listed company:

The Company should send the applicable form to its immediate shareholder(s), who will provide them with a declaration letter in reply, stating its non-applicability alongside a brief outline of the Company’s shareholding structure.

Please note that this is a new regulation and therefore the specificities of the new requirements and procedures might change whilst it is being deployed.

Please do not hesitate to contact Ken Sit (KenSit@eversheds-sutherland.com) should you require any more information on the matter or for any further queries you may have.

For more information contact

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