Disclosure of Significant Beneficial Ownership

As per Section 90 of the Companies Act, 2013 and notified Companies (Significant Beneficial Owners) Rules 2013, every Reporting Company having shareholder that is a company or partnership firm or trust (“the Member“) has to mandatorily procure a declaration in Form BEN-1 from the ultimate beneficial owner (“the Individual Shareholder”) of all Members holding more than 10% of shareholding/control in the Reporting Company on or before September 10, 2018. The Form BEN-1 received from the Individual Shareholder is required to be filed in E-form BEN-2 within 30 days of receipt of declaration from the Individual Shareholder.

What do you have to do?

If the abovementioned Rules are applicable to your Company, request you to approach your Individual Shareholder for providing us the below mentioned details to enable us to assist you with the filing of E-form BEN-2:

  • Self-attested scanned copy of identity proof for resident individual i.e. PAN;
  •  Self-attested scanned copy of identity proof for non-resident individual i.e. Passport;
  •  Residential address;
  •  Nationality;
  • Occupation;
  • Percentage of voting rights in the company; and
  •   Date of acquisition of shares (if available).
How can LexStart Help?

  • Prepare and file Form BEN-1 i.e. Declaration by Individual Shareholder;
  • Prepare and file E-form BEN-2 i.e. Return to the Registrar; and
  • Prepare and maintain Register of Beneficial Owner.   

₹ 9,499 /-
ONWARDS

Penalty for non-compliance by Individual Shareholder?

  • Fine up to INR 1,00,000/- and a continuing penalty of INR 1,000/- per day.
  • The defaulter may be charged with fraud under Section 447 of Companies Act, 2013.
  • National Company Law Tribunal (“NCLT”) may impose restrictions on transfer of shares.
  • NCLT may suspension all rights attached to shares example voting rights, dividend etc.

If you need any information or clarification, please do not hesitate to contact us.

Your Brand | Your Strongest Asset

Your brand is the image that differentiates you from your competitors. It identifies your product, your service, your company! It may be represented by a sign, a symbol, a design, a word, a colour, or a combination thereof. It conveys a sense of quality, credibility, customer satisfaction. It plays a crucial role in your marketing strategy and is at the core of your business competitiveness. It generates customer loyalty and has a value. It may become your strongest asset

1.1      Branding Strategies And Business Success

Branding aims at building a distinctive and attractive presence in the market that helps gain and retain loyal customers. Effective branding involves creating an image in the consumers’ minds about the quality of a product or a service, mainly through advertising campaigns centred on the brand. It also requires ensuring the legal protection of the brand against competitors in the relevant markets. Branding strategies are at the core of sustained market competitiveness and business success.

1.2      Brand Creation, Management And Commercialization

Creating a brand implies choosing the signs that will distinguish your products or services from those of your competitors and getting them legally protected. The legal expression of your brand is a trademark. A trademark confers on you the exclusive right to prevent third parties from using the signs that distinguish your brand in the course of trade for identical or similar goods or services. You can register your trademark in India by filing an application at the Trademarks Registry (TMR) within the Office of the Controller General for Patents, Designs and Trademarks (CGPDTM). The registration of your trademark in India will be valid for a period of 10 years from the date of the trademark registration and can be renewed time and again for similar duration of 10 years. Managing your brand implies regularly renewing your trademarks and enforcing your rights against infringers and counterfeiters. The assignment and licensing of trademark rights may play a significant role in brand commercialization through partnership, merger and franchising initiatives.

1.3      Choosing Your Trademark – Best Practices

Creating a brand implies choosing the sign (trademark) that will distinguish your products or services form those of your competitors. In principle, any sign capable of distinguishing your goods or services from those of other undertakings in the market can constitute a trademark. Thus, your trademark may be constituted by a sign, a symbol, a design, a word, a colour, or a combination thereof. However, when choosing your trademark, there are certain requirements or limitations that you need to consider.

The trademark must be distinctive. In other words, it should consist of a sign or a symbol that serves to identify your products or services and distinguishes them from those of other companies/startups. For example, the symbol of Mercedes Benz or a BMW will distinguish the quality of the cars from any other cars in the automobile industry.

  • The trademark should not be descriptive of the specific goods or services that you wish to commercialize. Generic terms used to identify those goods or services, or terms that describe their characteristics, would not be accepted. For example, ALANKAR cannot be an ideal trademark for jewellery since directly or indirectly it is describing the source of the goods or service.
  • The trademark should be capable of being represented. Most trademark offices require graphical representation, even though some also accept other means of representation for special types of marks (e.g., MP3 audio recordings for sound marks). The Indian Trademarks Registry requires that your trademark be graphically represented.
  • The trademark should not be functional, which means that the sign that constitutes your trademark should not consist exclusively of a characteristic that results from the nature of the goods themselves or that is necessary to obtain a technical result. This is especially relevant in the case of three-dimensional marks. For example, A1 or Best.
  • The trademark should not be deceptive. A sign conveying a false origin or false characteristics of a product would be refused for protection on grounds of being deceptive.
  • Most countries would refuse protection as a trademark for signs that are contrary to public order or morality.
  • State flags, State emblems and names and emblems of intergovernmental organizations are excluded from protection as trade marks in most countries around the world.

1.4      Conclusion

Finally, most importantly, you must make sure that the sign you wish to use as your trademark is still available in the market and is not the same as or similar to a well-known mark or a trademark already registered by someone else for the same goods or services. Therefore, it is very important that you make an exhaustive search for the availability of your trademark in those markets where you would like to get it protected.

Also Read – Applying for a Trademark? Here is how you can get a proprietor code.

Disclosure of Significant Beneficial Ownership

The Ministry of Corporate Affairs (MCA) on June 13, 2018 notified Section 90 of the Companies Act, 2013 (Act); and notified Companies (Significant Beneficial Owners) Rules 2013. This rule came into effect on June 14, 2018. These provisions require certain compliances to be followed by a Significant Beneficial Owner and a company.

Who is a “Significant Beneficial Owner”?

“Significant Beneficial Owner” means an individual who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds ultimate beneficial interest of not less than 10% in shares of a company or the right to exercise, or the actual exercising of significant influence or control in a company.

This applies to the (i) individual who is acting alone or together with one or more persons (includes partnerships) (ii) includes a trust (iii) person resident in India or outside India.

 Sr. No. Where Shareholder of a company is a Who is Significant Beneficial Owner?
A. Company Significant Beneficial Owner is the natural person, who, whether acting alone or together with other natural persons, or through one or more other persons or trust holds atleast 10% of share capital of the Company or exercise significant influence or control in the company.
B. Partnership Firm Significant Beneficial Owner is the natural person, who, whether acting alone or together with other natural persons, or through one or more other persons or trust holds atleast 10% of capital or is entitled of not less than 10% of profits of the partnership firm.
C. Trust The Significant Beneficial Owner shall be- the author of the trust, and the trustee and the beneficiaries with not less than 10% interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.

Where no natural person is identified in point no. A and B in the table above, the Significant Beneficial Owner is the relevant natural person who holds the position of senior managing official.

What is the obligation of Significant Beneficial Owner?

  • Every existing Significant Beneficial Owner is obligated to file a declaration in Form No. BEN-1 with the respective company. This declaration is to be made by September 10, 2018.
  • Every Significant Beneficial Owner shall file any change in his significant beneficial ownership within 30 days to the company.
  • Every individual, who acquires significant beneficial ownership in a Company, shall file a declaration in Form No.BEN-1 to the Company within 30 days of acquiring such significant beneficial ownership.

What are the obligations of the Company?

  • The company receiving the declaration has to maintain a register of Significant Beneficial Owners.
  • The company has to file a return in Form No. BEN-2of significant beneficial owners of the company and changes therein with the Registrar within 30 days from the date of receipt of the declaration.
  • Maintain a register of significant beneficial owner in Form No. BEN – 3.
  • Also, if the Company knows or has reason to believe that someone is s Significant Beneficial Owner (or has been a Significant Beneficial Owner in last 3 years) and is not registered with the company as a Significant Beneficial Owner then, the company is required to give notice to such person seeking information in Form No.BEN-4.

Consequences of non-disclosure by Significant Beneficial Owner

  • Shares may be made subject to the restriction on transfer.
  • All rights in shares held by such Significant Beneficial Owner shall be suspended, including, voting rights, dividend etc.
  • The MCA may impose penalty of up to INR 1,00,000/- and INR 1,000 per day the default continues.
  • Such Significant Beneficial Owner can be charged with fraud under Section 447 of Companies Act, 2013.

Consequences of non-compliance by a company?

Fine ranging from INR 10,00,000/- to INR 50,00,000/- for company and INR 1,000 per day the default continues.

Who is exempted from definition of Significant Beneficial Owner?

  • Mutual Funds;
  • Alterative Investment Funds (AIFs); and
  • Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (lnvlTs).