Declaration - beneficial ownership..not required..!!!??

Any one knows answer to this??

Can any one answer this?

11th July 2014

Dear Members

Section 89 (1) starts as follows

Where the name of a person is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares, such person shall make a declaration within such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares.

The query of this forum member Mr.Deepak is reproduced below

What is the requirement when beneficial ownership is terminated?

For e.g. Mr. A is holding 1 share as registered owner for Mr. B who is the beneficial owner.  The Company has filed Form 22B / MGT 6 with the ROC.

Now if Mr. A transfers this 1 share back to Mr. B, then :

1. Is there any requirement of filing a revised MGT 6 ;  or

2. Can it be updated at the time of Annual Return?

My Answer to the above Query

The name of Mr.A was entered in the Register of Members. The beneficial interest in such shares was held by Mr.B. Hence the company has filed Form 22B / MGT 6 with ROC after obtaining necessary declarations from Mr.A and Mr.B. This is absolutely correct.

Now after the transfer of shares from A to B, the name of Mr.B is entered in the Register of Members of the Company. Mr.B also holds the beneficial interest in such shares. When the name of the person who also holds beneficial interest in such shares is entered into the Register of Members of the Company the question of compliance of Section 89 does not arise. In this case, (repeat in this case) the earlier forms / declarations filed by the company will cease to have any effect the moment the shares are transferred from Mr.A. to B.

With regards

Muralidharan

Very well caught by Mr. Muralidharan.

This query is not simple as it appears.  Please appreciate that in eariler Form 22B and also present form MGT 6, there is no provisions of 'termination' of beneficial ownership already created.

Also, Section 89(3) and the rules only say that in case of any "change", the registered owner and beneficial owner have to file declaration again with the company and then the company will have to file MGT 6 again with ROC.

There is no clarity whether 'termination' is included / should be included in 'change'.  Even if the answer is positive that termination is part of change, then also you can not file MGT 6 as the form has not been designed as such so that one can file termination of beneficial ownership.

Now if any one has any thoughts, then please share.  I think this can only be done through Annual Return only and there is no other alternate.

Dear Members / Experts

I have similar query on beneficial ownership.

Unlisted Public Company, all members are Individuals Only and there is no Corporate holding in any shares of the company.

Recently there were some transfer of shares took place, where in

Mr. A, who was an existing shareholder actually controls the company and is not a Director has increased his %  holding to 51 %. Two New Persons have been transferred shares say Mr.B & Mr.C who are Employees of the Company.

Now, what should be done in the following cases

Situation 1 

Mr. B & Mr.C name sake hold the shares in their name on behalf of Mr.A, and Shares will be transferred to Mr.A when required.

Situation 2

Mr.B & Mr.C actually holds the shares in their name, and the Shares when need arises will be transferred to Mr. A or any other existing Shareholder.

How should we treat the status of Shares held by Mr.B & Mr.C, as currently the status is not clear whether Mr.B & Mr.C holds the shares in what capacties.

MGT -6 Filing  is applicable situation 1 or Situation 2 ?.

Please advice.

regards

Santosh Shah