Companies Act, 2013

Procedure for Declaration of Beneficial Interest in Shares

Aakanksha Singhal Aakanksha Singhal
Aakanksha Singhal

Published on: Oct 15, 2020

Khushboo Sharma
Khushboo Sharma

Updated on: Sep 30, 2023

(10 Rating)


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 are Registered Owner and such person shall make a declaration to the Company. [Section 89(1)]

Applicable Provisions:

  1. Section 44, 56, 89 & 173 of Companies Act, 2013
  2. Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014
  3. Rule 9 of the Companies (Management and Administration) Rules, 2014

Mandatory Requirements

  1. Beneficial owner shall make declaration to enforce his right in relation to any share. [Section 89(8)]
  2. Every person who holds or acquires a beneficial interest in share of a company is Beneficial Owner and such person shall also make a declaration to the company. [Section 89(2)]

Following Procedure is to be followed

  1. Declaration by the Registered Owner [Rule 9(1) of the Companies management and Administration Rule, 2014]
    The Registered Owner shall file a declaration to the Company that his name has been entered in the Register of Members as a Shareholder but he doesn’t have any beneficial interest in such shares, in Form MGT-4 within 30 days from the date on which his name is entered in the Register by the Company.
  2. Declaration by Beneficial Owner [Rule 9(2) of the Companies management and Administration Rule, 2014]
    The beneficial owner shall file a declaration that he holds the beneficial interest in shares that are not registered in his name, in Form MGT-5 within 30 days of acquiring such beneficial interest in the shares of the Company.
  3. Convene a Meeting of Board of Directors [As per section 173 & Secretarial Standard-1 (SS-1)]
    • On receipt of declaration in respect of beneficial interest, company shall issue Notice of Board Meeting to all the Directors of Company at their addresses registered with the Company, at least 7 days before the date of Board Meeting. A shorter notice can be issued in case of urgent business.
    • Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
    • Hold a meeting of Board of Directors of the Company and pass the following resolutions
      • to take note of declarations given by the Registered Owner and Beneficial Owner.
      • to authorize Company Secretary or Director or any other person of the company to make entry in the Register of Members.
      • to authorize CS or Director to file Return of Declaration with ROC.
    • Prepare and Circulate Draft Minutes within 15 days from the conclusion of the Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the Directors for their comments. [Refer the Procedure for Preparation and Signing of Minutes of Board Meeting]
  4. Make necessary entries in the Register of Members
    Company shall make necessary entries in the Register of Members in Form MGT-1 within 7 days from the date of receiving approval from the Board of Directors or receiving declarations from Registered Owner or Beneficial Owner.
  5. File Return of Declaration to ROC
    Company shall file within a period of thirty days from the date of receipt of declaration by it, a return in Form MGT-6 with the Registrar in respect of such declaration with fee.

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