Harsh Jain
Quick Summary
Introduction Section 89 of the Companies Act, 2013 (the Act) read with Rule 9 of Companies (Management and Administration) Rules, 2014 (the Rules) extensively deals with declaration required when a person holds shares in a Company as a registered or ostensible owner. This registered owner is a no
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FAQ :
Section 89 aims to inform the Central Government and companies about who indirectly holds shares or ownership in a company, helping to prevent issues like deadlocks, takeovers, and illegal transactions.
A 'registered owner' is the person whose name appears on the company's register of members but doesn't hold the beneficial interest, often acting as a nominee. The 'beneficial owner' is the person or entity who actually holds the beneficial interest in the shares.
The registered owner must file Form MGT-4, and the beneficial owner must file Form MGT-5 to declare their respective interests. The company then files a return in Form MGT-6.
Both the registered owner and the beneficial owner must file their declarations (or changes thereof) within thirty days from the date their name is entered in the register or from the date of acquiring the beneficial interest, respectively. The company must file Form MGT-6 within thirty days of receiving these declarations.
Failure to make the required declarations can result in a penalty of Rs. 50,000 for the beneficial or registered owner, with a further penalty of Rs. 200 per day for continuing failure, up to a maximum of Rs. 5,00,000. Companies also face penalties for not filing Form MGT-6.
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