Company law in India wants to know not just who is on the share register, but who ultimately owns or controls a company. That person is the significant beneficial owner (SBO). Where an individual holds a stake through another company, a trust, a partnership or a nominee, the company must identify them, record them and report them to the Registrar of Companies in Form BEN-2.
Most private companies with simple shareholdings have straightforward SBO positions, but group structures, foreign holding companies and nominee arrangements need a closer look. This guide explains who counts as an SBO, the forms and timelines, and how to keep the records current.
Key takeaways
- An SBO is an individual who, alone or with others, holds at least 10% of shares, voting rights or dividend rights, or exercises significant influence or control, through indirect holdings.
- The SBO must declare in Form BEN-1 within 30 days of becoming an SBO or of any change.
- The company must file Form BEN-2 with the ROC within 30 days of receiving the declaration, and keep a register in Form BEN-3.
- The company must actively identify SBOs, including by sending Form BEN-4 notices to non-individual members holding 10% or more.
- Section 90 prescribes penalties for the SBO, the company and its officers in default.
Who is a significant beneficial owner?
Section 90 of the Companies Act 2013 and the Companies (Significant Beneficial Owners) Rules 2018 define an SBO as an individual who, acting alone or together with others (including through a trust), holds indirectly, or together with direct holdings, any of the following:
- at least 10% of the share capital;
- at least 10% of the voting rights;
- the right to receive or participate in at least 10% of distributable dividends or other distributions; or
- the right to exercise significant influence or control in any manner other than through direct holdings alone.
An individual who holds shares only directly, in their own name, is recorded as a member rather than reported as an SBO. The rules focus on the indirect element.
Tracing indirect holdings
The rules explain how to look through intermediate entities:
| If the member is a | The individual is treated as holding through it if they |
|---|---|
| Company | Hold a majority stake in that company, or in its ultimate holding company |
| Hindu undivided family | Are the karta of the HUF |
| Partnership firm or LLP | Are a partner, or hold a majority stake in a body corporate that is a partner |
| Trust | Are a trustee (discretionary or charitable trust), a beneficiary (specific trust), or the author or settlor (revocable trust) |
| Pooled investment vehicle | Are a general partner, investment manager or CEO of the manager, where the vehicle is based outside India |
A simple example
ABC Private Limited has two members: Ms Rao holds 40% directly, and XYZ Holdings Limited holds 60%. Mr Mehta holds 70% of XYZ Holdings. Mr Mehta is an SBO of ABC because he holds a majority stake in a body corporate that holds 10% or more of ABC. Ms Rao holds her shares directly and is shown as a member, not as an SBO, unless she also has an indirect route.
The forms and the timeline
- BEN-1: the SBO gives a declaration to the company within 30 days of acquiring SBO status or any change in it.
- BEN-2: the company files a return with the ROC within 30 days of receiving the BEN-1 declaration.
- BEN-3: the company records SBO details in a register of significant beneficial owners, open for inspection by members.
- BEN-4: the company sends a notice to any non-individual member holding 10% or more (and to any person it believes may be an SBO), seeking information to identify SBOs.
If a person does not respond or the company is not satisfied, the company may apply to the Tribunal for directions, including restrictions on the shares.
Exemptions
The rules do not apply to the extent shares are held by:
- the Investor Education and Protection Fund Authority;
- the holding company of the reporting company (provided the holding company itself reports its SBOs);
- the Central or a State Government, or a local authority;
- a body corporate or entity controlled by the Central or State Governments;
- investment vehicles registered with and regulated by SEBI, RBI, IRDAI or PFRDA, such as mutual funds, alternative investment funds, REITs and InvITs.
Limited liability partnerships have a separate but similar framework under the LLP (Significant Beneficial Owners) Rules 2023, with their own forms.
Penalties under section 90
| Default | Penalty |
|---|---|
| SBO fails to declare | ₹50,000, plus ₹1,000 per day of continuing failure, up to ₹2 lakh |
| Company fails to maintain the register, file BEN-2 or allow inspection | ₹1 lakh, plus ₹500 per day of continuing failure, subject to the statutory cap |
| Every officer in default | ₹25,000, plus ₹200 per day of continuing failure, subject to the statutory cap |
The MCA has issued many adjudication orders for late BEN-2 filings, so it is worth treating these timelines as firm.
A practical significant beneficial owner checklist
- Map the shareholding chart, including all intermediate companies, trusts, firms and foreign parents, up to individuals.
- Send BEN-4 notices each year and whenever a corporate or non-individual shareholder holds 10% or more.
- Collect BEN-1 declarations at every change: share transfers, fresh allotments, group restructurings, changes in trusteeship.
- File BEN-2 promptly and update the BEN-3 register.
- Align with other filings: the annual return (MGT-7 or MGT-7A), FDI reporting such as FC-GPR, and bank KYC should show consistent ownership. Our guides on ROC annual filing and FDI reporting cover these.
- Review nominee and beneficial interest declarations under section 89 at the same time.
Frequently asked questions
Who is a significant beneficial owner under the Companies Act?
An individual who, through indirect holdings alone or together with direct holdings, has at least 10% of shares, voting rights or dividend rights, or significant influence or control over the company.
What is the due date for Form BEN-2?
Within 30 days of the company receiving the BEN-1 declaration from the SBO.
Does a company with only individual shareholders need to file BEN-2?
Usually not, if all members hold shares directly in their own names and no one exercises control through an indirect route. The company should still document its assessment.
What is Form BEN-4?
It is a notice the company sends to a non-individual member holding 10% or more, or to anyone it believes may be an SBO, seeking the information needed to identify SBOs.
If you would like help mapping your ownership structure and completing SBO filings, our corporate compliance team is happy to assist.
This article is general information based on the law as of September 2026, and is not legal or tax advice. Please check the facts of your own case with a professional before acting.