BEN-2 Filing Under the Companies Act, 2013

Transparency in ownership is really important. The Companies Act 2013 wants to make sure that companies are honest, about who owns them. The Ministry of Corporate Affairs made some rules to stop people from using companies to launder money or hide who really owns them. They are called Significant Beneficial Ownership rules.

When someone is a Significant Beneficial Owner they have to inform the company in Form BEN-1. Then the company has to file Form- BEN-2 with the Registrar of Companies.

This article will tell you all about BEN-2 filing. It will explain when you need to do it how long you have to do it what papers you need what happens if you do not do it and it will give you some examples of how it works with Significant Beneficial Ownership.

Table of Contents

What is BEN-2?

Form BEN-2 is an e-form filed by a company with the Registrar of Companies to report the details of every Significant Beneficial Owner (SBO) as declared by such individual through Form BEN-1.

The filing enables the MCA to maintain a transparent database of individuals who ultimately own or control companies.

Legal Provisions Governing BEN-2

BEN-2 filing is governed by:

Section 90 of the Companies Act, 2013
Companies (Significant Beneficial Owners) Rules, 2018 (as amended)

The provisions require companies to identify individuals having significant beneficial ownership and report the same to ROC.

Who is a Significant Beneficial Owner (SBO)?

An SBO is an individual who, acting alone, together, or through one or more persons or trusts, possesses one or more of the following rights or entitlements in the reporting company:

Holds 10% or more indirect shares.
Holds 10% or more indirect voting rights.
Has the right to receive or participate in 10% or more distributable dividend or any other distribution.
Exercises significant influence.
Exercises control.

The individual may also hold direct interest along with indirect interest.

Meaning of Beneficial Interest

Beneficial interest means the right or entitlement of a person to:

Exercise rights attached to shares, or
Receive dividends or other distributions,

even if the shares are registered in another person’s name.

Applicability of BEN-2

BEN-2 is applicable to every reporting company that has received a declaration from an SBO in Form BEN-1.

The obligation lies on the company, not on the individual SBO.

When is BEN-2 Required to be Filed?

A company must file BEN-2 whenever:

A new SBO is identified.
Existing SBO details change.
Change in beneficial ownership percentage.
Change in control or significant influence.
Any modification in particulars declared in BEN-1.

Timeline for Filing BEN-2

The company must file BEN-2 within 30 days from the date of receipt of Form BEN-1 from the Significant Beneficial Owner.

Failure to adhere to the timeline may attract penalties.

Documents Required for BEN-2 Filing

Generally, the following documents are attached:

Form BEN-1 received from SBO
Declaration by SBO
Board Resolution authorizing filing
Organization chart (if required)
Shareholding pattern
Identification documents of SBO (where applicable)
Any supporting documents explaining ownership structure

Information to be Furnished in BEN-2

The form generally contains:

CIN of the company
Name of company
Registered office
Particulars of SBO
Date of acquiring beneficial ownership
Nature of beneficial interest
Percentage of ownership
Mode of holding
Details of intermediary entities
Details of control or significant influence

Step-by-Step Process for Filing BEN-2

Step 1: Receive BEN-1

The SBO submits Form BEN-1 to the company.

Step 2: Verify Information

The company verifies:

Shareholding structure
Ultimate beneficial ownership
Supporting documents

Step 3: Pass Board Resolution

Authorize a director or company secretary to file BEN-2.

Step 4: Prepare BEN-2

Fill all details of:

Company
SBO
Ownership chain
Nature of interest

Step 5: Attach Supporting Documents

Upload all necessary attachments.

Step 6: Digital Signing

The form is digitally signed by:

Director, or
Company Secretary (where applicable)

Step 7: Professional Certification

The form is certified by:

Chartered Accountant
Company Secretary
Cost Accountant

(in practice)

Step 8: Upload on MCA Portal

Upload the form and pay prescribed filing fees.

Penalties for Non-Compliance

Penalty on Company

Where a company fails to comply with Section 90 requirements, it shall be liable to penalties as prescribed under the Companies Act, 2013.

Penalty on SBO

If an SBO fails to make the required declaration, penalties may also apply.

Additionally, the company may apply to the Tribunal for restrictions on the concerned shares under Section 90.

Important Exemptions

The SBO Rules generally do not apply where the shares are held through certain exempt entities, such as:

Central Government
State Government
Local Authorities
Reporting companies
Investment Vehicles regulated by:
- SEBI
- RBI
- IRDAI
- PFRDA

Subject to satisfaction of prescribed conditions under the SBO Rules.

Practical Examples

Example 1

ABC Pvt. Ltd. has a shareholder company.

Mr. A ultimately owns 75% of the shareholder company.

Since Mr. A indirectly holds more than 10% in ABC Pvt. Ltd., he qualifies as an SBO.

BEN-1 must be submitted by Mr. A and BEN-2 must be filed by ABC Pvt. Ltd.

Example 2

Mr. B directly owns 15% shares in XYZ Pvt. Ltd.

Since he holds only direct ownership without the prescribed indirect holding required under the SBO Rules (unless covered by the applicable criteria), he may not qualify as an SBO merely because of direct shareholding.

Common Mistakes to Avoid

Missing the 30-day filing deadline.
Incorrect ownership chain.
Ignoring indirect holdings.
Filing without verifying BEN-1.
Wrong percentage calculations.
Incomplete attachments.
Failure to update changes in beneficial ownership.
Assuming only shareholding matters while ignoring control and significant influence.

Conclusion

The BEN-2 filing is really important for companies to follow the rules. Companies need to make sure they know who the real owners of the company are, which is what we call Significant Beneficial Owners of the company. They have to get these owners to fill out a form called BEN-1 on time. Then they have to send this information to the Registrar of Companies which’s in charge of keeping track of all the companies before the deadline, for BEN-2 filing. If companies do this and keep records and check the ownership of the company regularly they can avoid getting in trouble and follow the rules of the Companies Act, 2013 for BEN-2 filing.

Frequently Asked Questions (FAQs)

1. What is Form BEN-2?

Form BEN-2 is an e-form filed by a company with the Registrar of Companies to report the details of its Significant Beneficial Owners under Section 90 of the Companies Act, 2013.

2. Who is required to file BEN-2?

The company (reporting company) is responsible for filing BEN-2 after receiving Form BEN-1 from the Significant Beneficial Owner.

3. What is the due date for filing BEN-2?

BEN-2 must be filed within 30 days from the date of receipt of Form BEN-1 by the company.

4. Is BEN-2 applicable to all companies?

It applies to reporting companies that have Significant Beneficial Owners under the Companies Act and the Companies (Significant Beneficial Owners) Rules, 2018.

5. What is the threshold for becoming an SBO?

An individual is generally considered an SBO if they hold, indirectly or together with any direct holdings, 10% or more of shares, voting rights, distributable dividend rights, or exercise significant influence or control over the reporting company.

6. What is the difference between BEN-1 and BEN-2?

BEN-1: Declaration made by the Significant Beneficial Owner to the company.
BEN-2: Return filed by the company with the Registrar of Companies based on the declaration received in BEN-1.

7. Is professional certification mandatory for BEN-2?

Yes. BEN-2 is required to be digitally certified by a practicing Chartered Accountant, Company Secretary, or Cost Accountant.

8. What happens if BEN-2 is not filed?

Failure to file BEN-2 may attract penalties under Section 90 of the Companies Act, 2013, and the company may also face regulatory action for non-compliance.

9. Can BEN-2 be filed without receiving BEN-1?

No. BEN-2 is filed only after the company receives a declaration in Form BEN-1 from the Significant Beneficial Owner.

10. What documents should be maintained by the company for BEN-2 compliance?

The company should retain Form BEN-1, supporting ownership documents, board resolutions, shareholding records, organizational charts (where applicable), and any evidence used to determine the beneficial ownership structure.