Module: | Statutory Audit, NFRA & ICAI Standards
Q58: Consider the following statements regarding the Significant Beneficial Ownership (SBO) rules under Section 90 of the Companies Act:
1. A Significant Beneficial Owner is defined as an individual who, acting alone or together with others, holds indirectly (or together with direct holdings) not less than 10 percent of the shares or voting rights in a reporting company.
2. Every reporting company is required to file a return in Form BEN-2 with the Registrar of Companies within 30 days of receiving a declaration from the SBO.
3. The SBO reporting provisions do not apply to shares of the reporting company held by the Investor Education and Protection Fund (IEPF) authority.
Which of the above statements is/are correct?
2. Every reporting company is required to file a return in Form BEN-2 with the Registrar of Companies within 30 days of receiving a declaration from the SBO.
3. The SBO reporting provisions do not apply to shares of the reporting company held by the Investor Education and Protection Fund (IEPF) authority.
Which of the above statements is/are correct?
✅ Correct Answer: D
🎯 Quick Answer:
D. All statements 1, 2, and 3 are correct.Structural Breakdown: Statement 1 is correct; the threshold for reporting is 10% indirect holding (or combined direct/indirect). Statement 2 is correct; Form BEN-2 is the mandatory e-form used to alert the MCA of the SBO's identity within a 30-day window.
Statement 3 is correct; shares held by government bodies, including the IEPF, mutual funds, and SEBI-registered Alternative Investment Funds (AIFs), enjoy statutory exemption from SBO tracking.
Historical/Related Context: The SBO framework was drastically tightened to combat money laundering and tax evasion via shell companies, aligning Indian corporate law with the global Financial Action Task Force (FATF) guidelines.
Causal Reasoning: Exempting bodies like the IEPF or Mutual Funds is logical because their ultimate beneficiaries are the general public or dispersed retail investors, not a single individual attempting to secretly control a corporation.