Who is a significant beneficial owner under section 90?
Who is a significant beneficial owner under section 90 of the Companies Act, 2013 and the SBO Rules, 2018: the 10% indirect-holding test, the declaration duty, the company register, and how it links to Forms BEN-1 and BEN-2.
In this guide
Section 90 of the Companies Act, 2013 and the SBO Rules, 2018 identify the individual who ultimately owns or controls a company but is not on its register of members. An individual is a significant beneficial owner if they hold, indirectly or with any direct holding, at least 10% of shares, voting rights, or distributable dividend, or exercise significant influence or control. The SBO declares in Form BEN-1 and the company reports in Form BEN-2.
What does section 90 require?
Section 90 of the Companies Act, 2013, read with the Companies (Significant Beneficial Owners) Rules, 2018, identifies the individual who ultimately owns or controls a company but is not named as a shareholder on its register of members. The aim is to look through layered or indirect holdings to the real person behind them.
The framework turns on one idea: the registered shareholder is not always the true owner. Section 90 makes that hidden owner declare themselves and makes the company record and report the position.
Who is a significant beneficial owner?
A significant beneficial owner is an individual who holds an ultimate beneficial interest in a company but whose name is not entered in the register of members as the holder of those shares. The person is always a natural individual, traced through whatever entities sit between them and the reporting company.
Because an SBO is an individual, the analysis follows the chain of holdings up through companies, LLPs, trusts, or other bodies until it reaches a real person who meets the test.
Can a company or LLP itself be an SBO?
No. Section 90 and the SBO Rules, 2018 identify a natural person. A holding company that owns 60% is a registered shareholder, not the SBO. Keep tracing until an individual meets the 10% test or exercises control.
What is the section 90 10% test?
An individual is an SBO if, indirectly or together with any direct holding, they meet a 10% threshold on any one of the measures below, or exercise significant influence or control. Meeting any single limb is enough.
- At least 10% of the shares of the company.
- At least 10% of the voting rights in the shares.
- The right to receive at least 10% of the total distributable dividend or other distribution.
- Significant influence or control over the company by any other means.
The threshold is applied to the indirect holding, or the combined direct and indirect holding, not to a purely direct holding on its own. This is why an SBO is often not the same person as the largest registered shareholder.
Does 9% direct plus 2% through a holdco make an SBO?
Yes, on the combined test. Section 90 looks at the indirect holding together with any direct holding. Nine per cent on the register plus two per cent through another company is 11%, which meets the 10% limb. Testing only the registered 9% is how the SBO is missed.
Is control enough even below 10%?
Yes. Significant influence or control is its own limb under the SBO Rules, 2018. An individual who directs the company without holding 10% of shares, votes, or dividend can still be an SBO. The 10% figures are not a safe harbour against the control test.
What SBO declaration does section 90 require?
A person who is an SBO must declare their interest to the company, and the company must maintain a register of significant beneficial owners. The declaration duty sits on the individual, and the record and reporting duties sit on the company. A company can also give notice seeking information where it believes a person is an SBO.
The register is a statutory record. It holds the SBO details the company receives and supports the return the company files with the Registrar.
How do BEN-1 and BEN-2 fit?
The SBO declares in Form BEN-1, the company keeps the register in Form BEN-3, and the company reports to the Registrar in Form BEN-2. The table maps each form to who acts. For the filing clock and the ROC return itself, use the Form BEN-2 filing guide; this page stays on the section 90 test that decides whether anyone is an SBO at all.
| Form | Who files or keeps it | Purpose |
|---|---|---|
| BEN-1 | The SBO | Declares the beneficial interest to the company. |
| BEN-2 | The company | Reports the SBO declaration to the Registrar. |
| BEN-3 | The company | Register of significant beneficial owners. |
How do I apply the SBO test?
- Open the section 90 text and read it with the SBO Rules, 2018 for the definitions.
- Trace the holding chain through every entity to the individuals behind it.
- Apply the 10% test on shares, voting rights, dividend, and control to each individual.
- Collect BEN-1 declarations, maintain the BEN-3 register, and file BEN-2 for reportable SBOs, following the BEN-2 filing steps.
- Document the analysis even where the conclusion is that there is no reportable SBO.
Why is the SBO test applied wrongly?
- Testing only the direct register and missing an individual behind an indirect holding.
- Applying the 10% threshold to a direct holding alone rather than the combined position.
- Treating the largest registered shareholder as the SBO by default.
- Skipping the BEN-3 register or the BEN-2 filing after receiving a BEN-1.
- Concluding there is no SBO without taking steps to find out and recording the basis.
Where are SBO rule changes published?
Section 90 sits in the Companies Act, 2013, and the SBO Rules and forms around it move through MCA notifications. Complied AI keeps MCA updates in one feed so you can open the notification behind a rule or form change, then read section 90 next to it when you need the exact SBO test.
Practical checks
Common questions
Who is a significant beneficial owner under section 90?
A significant beneficial owner is an individual who ultimately owns or controls a company but whose name is not entered as the shareholder in the register of members. Under section 90 of the Companies Act, 2013 read with the SBO Rules, 2018, the person is identified by an indirect holding, or a combined direct and indirect holding, meeting a 10% threshold, or by significant influence or control.
What is the 10% threshold for an SBO under the SBO Rules?
An individual is an SBO if, indirectly or together with any direct holding, they hold at least 10% of the shares, at least 10% of the voting rights in the shares, the right to receive at least 10% of the total distributable dividend, or exercise significant influence or control. Meeting any one of these limbs under the SBO Rules, 2018 makes the person an SBO.
Is a direct shareholder on our register automatically an SBO?
No. A purely direct shareholder whose name is on the register of members is generally not an SBO on that direct holding alone. Section 90 targets the individual behind indirect or layered holdings. A person with a direct holding still tests the combined direct and indirect position against the 10% threshold, but the registered name by itself is not the test.
What is Form BEN-1, and who files it?
Form BEN-1 is the declaration a significant beneficial owner gives to the company about their beneficial interest, under the SBO Rules, 2018. The SBO files it with the company, not with the Registrar. The company then reports that declaration to the Registrar in Form BEN-2 and keeps the register in Form BEN-3. BEN-1 is the source document behind the company's filing.
Does the company have to keep an SBO register in Form BEN-3?
Yes. The company must maintain a register of significant beneficial owners in Form BEN-3 based on the declarations it receives under section 90. The register records the SBO details and is part of the company's statutory records under the SBO Rules, 2018. Skipping BEN-3 after a BEN-1 arrives is a common miss.
Our holding company owns 60% of us. Is the holding company the SBO?
No. A significant beneficial owner under section 90 is always a natural person, so a body corporate shareholder never itself is the SBO. Trace up the chain to the individual who holds at least 10% indirectly through that holding company. That individual declares in BEN-1. How the company then files BEN-2 is in the Form BEN-2 filing guide.
Nobody has crossed 10%. Do we still have an SBO to report?
Apply the test rather than assume there is no SBO. Where holdings are direct and no individual meets the indirect 10% test on shares, voting rights, or dividend, or exercises control, there may be no reportable SBO. The company is still expected to take steps to find out and document that conclusion, including the working papers behind the 10% analysis.
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How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 6 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
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