Significant Beneficial Ownership (SBO) & Form BEN-2 Guide

An in-depth regulatory breakdown of Section 90 of the Companies Act, 2013, identifying ultimate beneficial owners, issuing BEN-1 declarations, and filing Form BEN-2 with the Registrar of Companies.

1. Who Qualifies as a Significant Beneficial Owner (SBO)?

Under the Companies (Significant Beneficial Owners) Rules, an SBO is any individual who, acting alone or together, or through one or more persons/trusts, possesses one or more of the following rights or entitlements in a reporting company:

• Holding indirect or combined direct-and-indirect equity stake of not less than 10%.
• Holding right to exercise significant influence or control over the company.
• Having right to receive or participate in dividend or other distributions through indirect holdings exceeding 10%.

2. The Compliance Workflow: BEN-1 and BEN-2

1. Identification & Notice (BEN-4): Companies must identify individuals holding beneficial interests and issue statutory notices where ownership chains are opaque.
2. Declaration by Owner (BEN-1): The individual beneficial owner must submit a formal declaration in Form BEN-1 to the company detailing their ownership structure.
3. Filing with ROC (BEN-2): Within 30 days of receiving the BEN-1 declaration, the company must file Form BEN-2 electronically on the MCA portal along with professional certification.