NON-FILING OF BEN-2: ROC
BANGALORE IMPOSES ₹10 LAKH PENALTY ON CHONGQING JIELI INDIA PRIVATE LIMITED
FACTS OF THE CASE
Chongqing Jieli India
Private Limited had a foreign holding company, Chongqing Jieli Wheel
Manufacturing Co. Ltd., China, holding 99.99% of the shares of the Indian
company.
During an inquiry under
Section 206(4) of the Companies Act, the Inquiry Officer noted that the company
had not filed Form BEN-2 with the Registrar of Companies.
ROC Bangalore imposed a
penalty of ₹10 lakh on Chongqing Jieli India Private Limited for non-filing of
BEN-2, reflecting serious lapses in compliance with the Companies Act, 2013.
The order highlights the company’s failure to disclose beneficial ownership, a
critical requirement under Section 90, and penalizes both the company and its
officers in default.
WHAT IS THE LAPSE?
·
Section 90 mandates
disclosure of significant beneficial ownership.
·
Rule 3 of the Companies
(Significant Beneficial Owners) Rules, 2018 requires filing of BEN-2 within 30
days of receipt of BEN-1 declaration.
·
Non-compliance attracts
penalties under Section 450/454 of the Act.
ARGUMENT BY THE COMPANY
The company submitted that
its foreign holding company was itself held by four individuals:
• Ping Zeng–1%
• Sun Zhihao–33%
• Sun Haochun–33%
• Sun Yuqi–33%
The company's position was
that none of these individuals individually held more than 50% of the holding
company. Therefore, according to the company, none of them satisfied the
"majority stake" test for indirect holding.
The company further stated
that:
➡️No individual
exercised control over the holding company;
➡️There was no
written agreement giving any director control over management or policy
decisions of the Indian company; and
➡️Consequently,
Section 90 should not apply and there was no requirement to file BEN-2.
The company also referred to
a legal opinion obtained from a PCS supporting its position.
WHAT DID ROC BANGALORE SAY?
ROC Bangalore did not accept
this explanation.
The ROC referred to Section
90 read with the Companies (Significant Beneficial Owners) Rules, 2018 and
observed that the relevant threshold for determining SBO includes an individual
who holds, directly or indirectly, not less than 10% of the voting rights,
along with the applicable control provisions.
The ROC specifically observed:
“the Directors who holds
more than prescribed limits shall file BEN-1 to company and the Company has to
file BEN-2.”
Accordingly, the ROC
concluded that the company had violated Section 90 read with Rule 2(1)(h) of
the SBO Rules.
The ROC specifically
directed the company and officers to file:
MGT-6 and BEN-2 within 60
days from the date of the order, after following the due process.
BOARD & COMPLIANCE
OFFICERS SHOULD THEREFORE ENSURE:
✔
Identification of SBOs
✔ Timely BEN-1
disclosures
✔ Verification
of the information received
✔ Timely filing
of BEN-2
✔ Maintenance
of supporting records
A missed BEN-2 filing can
become a significant corporate-law compliance exposure.
KEY TAKEAWAY
BEN compliance cannot be
examined merely by looking at the immediate shareholder of the Indian company.
Where the shareholder is a foreign body corporate, the ownership and control
structure behind that entity becomes extremely important. “No individual holds
more than 50%” should not, by itself, be treated as the end of the SBO
analysis.
#Section 90 read with Rule
2(1)(h) of the SBO Rules,
The shareholding, voting
rights, indirect holding and control arrangements need to be examined carefully
before concluding that BEN-1/BEN-2 is not applicable.
# Your Compliance expert R V
SECKAR, FCS, LLB 79047 19295,
