Section 187C

Officer- Group companies Secretarial Dpt.

Dear All,

 I am happy to share the above mentioned topic in this club. I hope it is easy to interpret and  will be usefull to some of you. As this is the 1st time I have tried to write about a topic, there may be many mistakes, kindly correct and guide me.      

Inputs are invited.

Thank you,



Source: Bare Act


187C. Declaration by persons not holding beneficial interest in any share

1)      Notwithstanding anything contained in section 150, section 153B or section 187B, a person, whose name is entered, at the commencement of the Companies (Amendment) Act, 1974, or at any time thereafter, in the register of members of a company as the holder of a share in that company but who does not hold the beneficial interest in such share, shall, within such time and in such form as may be prescribed, make a declaration to the company specifying the name and other particulars of the person who holds the beneficial interest in such share.

For example: Mr. A, a registered shareholder of ABC Ltd, if desires to transfer his beneficial interest to Mr. B, and then he has to declare it in prescribed format to the Company in FORM-1(Annexure- A)


2)      Notwithstanding anything contained elsewhere in this Act, a person who holds a beneficial interest in a share or a class of shares of a company shall, within thirty days from the commencement of the Companies (Amendment) Act, 1974, or within thirty days after his becoming such beneficial owner, whichever is later, make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed.


3)      Whenever there is a change in the beneficial interest in such shares the beneficial owner shall, within thirty days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed.


Here the person holding the beneficial interest has to make a declaration to the Company specifying his details and the Particulars of the person from whom the beneficial interest is acquired.

 Let us take the same example:

As Mr. B is the beneficial owner, he should declare to the Company the particulars of his interest and particulars of Mr. A in FORM II (Annexure B)


4)       Notwithstanding anything contained in section 153 where any declaration referred to in sub-section (1), sub-section (2) or sub-section (3) is made to a company, the company shall make a note of such declaration, in its register of members and shall file, within thirty days from the date of receipt of the declaration by it, a return in the prescribed form with the Registrar with regard to such declaration.


      As per this sub section, after receiving the declaration from the said benefiacial owner, the Company has to make a declaration to ROC within 30 days in FORM III(Annexure C)


5)      (a) If any person, being required by the provisions of sub-section (1), sub-section (2) or sub-section (3), to make a declaration, fails, without any reasonable excuse, to do so, he shall be punishable with fine which may extend to one thousand rupees for every day during which the failure continues.

(b) If a company fails to comply with the provisions of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees for every day during which the default continues.

6)       Any charge, promissory note or any other collateral agreement, created, executed or entered into in relation to any share, by the ostensible owner thereof, or any hypothecation by the ostensible owner of any share, in respect of which a declaration is required to be made under the foregoing provisions of this section, but not so declared, shall not be enforceable by the beneficial owner or any person claiming through him.


7)      Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend in accordance with the provisions of section 206, and the obligation shall, on such payment, stand discharged.


8)       The provisions of this section shall not apply to the trustee referred to in section 187B on and after the commencement of the Companies (Amendment) Act, 2000.



Note: This declaration is generally used when a Company needs to transfer all the shares to one person but as per Companies Act, one person cannot be a member. In case of a Public limited Company, the minimum limit is 7 members. Therefore, Suppose if a Public Limited Company has exactly seven members and it decides to transfer all the beneficial interest in the favour of some other individual/ Company, all the 7 registered shareholders have to give declaration as per this section.






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