Section 89 of comapnies act, 2013

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2015 Which kind of declaration is reqd under section 89? What Does beneficial interest mean . While preparing register of members ..what to be written in DATE OF DECLARATION U/S 89, if applicable.

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2015 Does it mean shares taken by one person and rights to receive benefits is in favor of another person. Declaration to that effect is reqd.?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

23 July 2025 Yes, your understanding is broadly correct.

Here is a detailed explanation regarding **Section 89 of the Companies Act, 2013**, which deals with **beneficial ownership of shares** and related **declarations**:

---

### ✅ **Section 89 — Declaration in Respect of Beneficial Interest in Any Share**

#### 🔍 What It Covers:

When the **registered owner of shares** is **not the beneficial owner**, or **vice versa**, then both parties must make **declarations** to the company.

This typically occurs when:

* Shares are held **in someone else's name** (registered holder),
* But **someone else enjoys the rights** (benefits, dividends, voting, etc.).

---

### 🔑 **Meaning of "Beneficial Interest"**

As per **Section 89(10)**:

> "Beneficial interest in a share includes the right or entitlement of a person —
> (i) **to exercise any or all rights** attached to such share; or
> (ii) **to receive or participate in any dividend or other distribution** in respect of such share."

So yes — **if Person A holds shares, but Person B enjoys the benefits**, Person B is the **beneficial owner**, and this arrangement must be declared.

---

### 📜 **Forms and Declarations Under Section 89**

| Form No. | Filed By | Purpose |
| -------------- | -------------------- | ------------------------------------------------------------------------------- |
| **Form MGT-4** | **Registered owner** | Declares that they hold shares **on behalf of someone else** (beneficial owner) |
| **Form MGT-5** | **Beneficial owner** | Declares that they are the real owner of shares, even though not registered |
| **Form MGT-6** | **Company** | Filed by company with ROC after receiving MGT-4 & MGT-5, within 30 days |

---

### 🗓️ **"Date of Declaration under Section 89" in Register of Members**

If applicable, this would be the **date on which the company received the declaration** (Form MGT-4 and/or MGT-5) from the shareholder(s).

👉 So, in the Register of Members, under the column "**Date of declaration under Section 89**", you would write:

* The **date the company received Form MGT-4/MGT-5**, or
* Leave it blank if **not applicable** (i.e., if the registered owner and beneficial owner are the same).

---

### 📝 Example:

* Mr. A holds shares in his own name but is actually holding them **for Mr. B**.
* Mr. A must file **MGT-4** with the company.
* Mr. B must file **MGT-5** with the company.
* Company will then file **MGT-6** with the ROC and update the Register of Members.

---

### ⚠️ Penalty for Non-Compliance:

If declarations are **not filed**, or **false declarations** are made, both the shareholder and company officers may be liable for penalties under **Section 450**.

---

### ✅ Summary:

| Point | Clarification |
| ------------------------------------- | ---------------------------------------------------------------------------- |
| **Declaration under Section 89** | Required when **beneficial ownership ≠ registered ownership** |
| **Forms Involved** | MGT-4 (by registered owner), MGT-5 (by beneficial owner), MGT-6 (by company) |
| **"Date of Declaration" in Register** | Date when MGT-4 or MGT-5 received by the company |
| **Beneficial Interest** | Right to benefits/voting from shares, even if not in one’s name |

---

Let me know if you need sample formats or assistance in filling these forms.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now