SBO BEN-4 query

[Bhagyasree]

Dear Members,

Solicit your suggestions regarding SBO.

ABC Private  Limited (Indian company).

 XYZ Co. (Foreign holding Company) holds 99 % of ABC

PQR INC (Ultimate Holding Company) holds 99 % of XYZ

In PQR Inc, there is no shareholder (Individual or otherwise) holding ownership of 10% or above.(No case of majority shareholding at all)

In this case BEN-1 is not required to be given to ABC (Indian Company).

But According to SBO Rules, every reporting company, will be required to give notice in Form No. BEN-4 to all its members (who are not individuals) who hold more than 10% of the shares asking the members to, inter alia, disclose information of the SBO of the member.

Therefore is it obligatory on part of ABC to give notice in BEN-4 to XYZ Co., even though it knows there are no SBO?

[shashi bhushan]

Please Refer Explanation to the Rule which is as under

Explanation III. – For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member of the
reporting company, namely:-
(i) where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual,––
(a) holds majority stake in that member; or
(b) holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member;

So in this case under explanation No such percentage is defined, so a single individual holding even holding 1% (for example) in ultimate holding terms as to hold a right or entitlement indirectly in the reporting company .

Please analyze and comment also, as per my opinion the ultimate purpose and intention of law maker of this rule to Piercing the corporate veil, to check the original benefit derived by the corporation.

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Thanks & Regards

Shashi Bhushan
Mob: +91-9999927624
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