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Beneficial owner

PUNEET GUPTA 9780822635 (B.COM CA FINAL STUDENT BATHINDA) (58 Points)

14 January 2010

Hi Guys.......

can anybody explain what is beneficial ownership? explain with example.

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CA. RUPESH JOSHI (Chartered Accountant) (174 Points)
Replied 14 January 2010

Beneficial ownership relates to the state of having effective ownership over a property or a security without actually owning the title to it.

eg. 1)speculative / arbitrage transactions i.e simultaneous purchase and sale of stocks.

2)lease transactions - a lessee is a beneficial owner of the property though the title / ownership lies with lessor.

3) Holding a voter proxy

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PUNEET GUPTA 9780822635 (B.COM CA FINAL STUDENT BATHINDA) (58 Points)
Replied 14 January 2010

thanks rupesh joshi ji.

Amir (Learner) (4016 Points)
Replied 14 January 2010

Dear Puneet,

Just want to add more on this -

Beneficial owner - This thing distuinguishes between the "OWNER" & the "REAL OWNER"

Like we hold securities in Demat A/c with Depositors, Now in the books of Co. I mean Share Holder's register the shares are recorded in the name of Depositors(i;e NSDL & CDSL), in this case Investor is called as Beneficial Owner...Since Securities are held by Depositors(the owners) but in our benefits(i;e the Real Owner)

Another example would be of Trust that is a Trust is the owner of properties under it but the beneficial owners or the real owner would remain the beneficiaries of the trust....