The Securities and Exchange Board of India ("SEBI") vide its latest circular dated December 7, 2018 ("Circular") has mandated all listed entities to disclose to stock exchanges details pertaining to significant beneficial owners ("SBO") holding with effect from quarter ending March 31, 2019. SEBI has also prescribed the format for disclosure of SBO holdings by listed companies in its Circular. The details to be disclosed include name, nationality, permanent account number, date of creation/ acquisition of significant beneficial interest, etc.
An SBO, as defined under the Companies Act, 2013 ("Companies Act") read along with the Companies (Significant Beneficial Owners) Rules, 2018 ("SBO Rules"), is a natural person who, either by himself or directly or indirectly with others, holds beneficial interest of at least 10% (Ten percent) in shares of a company or has the right to exercise significant influence or control over such company.
SEBI's latest move on SBO front has come in light of the notification of Section 90 of the Companies Act, on June 13, 2018 along with the SBO Rules, which made it mandatory for SBOs to file a declaration with the company, disclosing the nature of its interest and other particulars under Form No. BEN-1. A filing in Form BEN-2 was required by the company in turn with the Registrar of Companies.
However due to lack of clarity, the Ministry of Corporate Affairs ("MCA") vide circulars dated September 6, 2018 and September 10, 2018 deferred the filings of Form BEN-1 and Form BEN-2 indefinitely, and revised forms are now awaited. In spite of this, going by SEBI's latest Circular, all listed companies will nevertheless need to disclose shareholding of SBOs from quarter ending March 31, 2019.
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It is a significant compliance on SBO holding for all listed companies going forward. While SEBI has mandated all listed entities to disclose the details of SBO from the quarter ending March 31, 2019, the revised forms are awaited from MCA for SBOs to disclose their holding to the company. In absence of this information, it may be a practical challenge for listed companies to collate and provide the information to the stock exchanges. Further, there was lack of clarity under the forms prescribed under Section 90. Those ambiguities should preferably be ironed out before the quarter ending March 31, 2019 deadline arrives. One would need to wait and watch for the MCA to release the revised forms as well under the Companies Act soon.
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