This article focuses on the substantive provisions relating to the declaration of beneficial ownership
in a company.

Sections 89 and 90 of the Companies Act, 2013 (Act) deal with ascertaining the beneficial owner of
the shares held in a company and disclosures in relation thereto. Both sections are applicable to all
companies.

Beneficial Ownership Provisions

Section 89 deals with the declaration with
respect to a beneficial interest in any share.
Section 89 of the Act requires a person to make
disclosure where his name is entered in the
register of company members as the holder of
shares but who does not hold a beneficial
interest in such shares. Such a person is
required to give disclosure in the prescribed
format to the company, specifying the name and
other particulars of the person who holds the
beneficial interest in such shares.

The said section also requires a person who is
the beneficial owner but not the legal owner to
make a declaration to the company. The
declaration in the prescribed form should specify
the nature of interest held by the beneficial
owner, the particulars of a person who is a legal
owner, etc.

It is to be noted that both the legal owner and
beneficial owner must declare to the company in
a prescribed format.

Sub-section (10) of Section 89 of the Act defines
beneficial owner in an inclusive manner that
beneficial interest in a share includes, directly or
indirectly, through any contract, arrangement or
otherwise, the right or entitlement of a person
alone or together with any other person to:

• exercise or cause to be exercised any or all the rights attached to such share; or
• receive or participate in any dividend or other
  distribution with respect to such share.

Thus, the above definition envisages two
persons, one who is a legal owner of the share
and another who has the right or entitlement to
deal with such share through any contract,
arrangement or otherwise.