The Ministry of Corporate Affairs, through a notification dated 18 June 2025, amended the Companies (Significant Beneficial Owners) Rules, 2018, tightening the beneficial ownership disclosure framework under Section 90 of the Companies Act, 2013. The amendments mandate updated Form BEN-2 filings with additional disclosure fields and enhance penalties for non-compliance, signalling a stricter regulatory posture on transparency of ultimate beneficial ownership.
Background
Section 90 of the Companies Act, 2013 requires every individual holding significant beneficial interest in a company — directly or through natural persons — to make a declaration to the company, which in turn must file the information with the Registrar of Companies through Form BEN-2. The provision was introduced to address concerns about opaque ownership structures being used to obscure the identity of individuals who ultimately control or benefit from corporate entities.
The existing framework, implemented through the Companies (Significant Beneficial Owners) Rules, 2018, had drawn criticism for limited enforcement and gaps in reporting. Industry consultations and reviews by the MCA revealed that a significant number of companies had either failed to file Form BEN-2 or had filed incomplete declarations. The Financial Action Task Force evaluations of India's anti-money laundering framework had also highlighted beneficial ownership transparency as an area requiring strengthening.
Key Provisions
The amended rules introduce the following changes:
Expanded disclosure fields in Form BEN-2: The revised form requires declaration of additional information including the chain of ownership through which significant beneficial interest is held, the nature of the interest (whether through shares, voting rights, or right to exercise significant influence), and identification details of all intermediate entities in the ownership chain.
Reduced reporting threshold: The threshold for identifying significant beneficial owners has been tightened. Companies must now report beneficial owners holding 10 per cent or more of shares or voting rights, reduced from the earlier threshold in certain categories, and must reassess their register of significant beneficial owners within 90 days of the notification.
Enhanced penalties: Non-compliance with the filing requirement now attracts a penalty of up to five lakh rupees on the company and two lakh rupees on every officer in default, increased from the earlier prescribed amounts. Continuing default attracts additional daily penalties until the filing is completed.
Annual compliance certificate: Companies are now required to include a compliance certificate from a company secretary in practice confirming the accuracy of the significant beneficial ownership register as part of their annual return filing.
Implications for Practitioners
The amendments impose a meaningful additional compliance burden on companies, particularly those with multi-layered holding structures. Company secretaries and compliance officers should initiate an immediate review of existing Form BEN-2 filings to identify gaps that need to be remedied within the 90-day transition window.
For corporate law practitioners advising foreign-invested companies and those with complex group structures, the expanded chain-of-ownership disclosure requirement will require detailed mapping exercises. Entities holding shares through trust structures, nominee arrangements, or multi-tiered subsidiaries will need to trace and document the full ownership chain.
The enhanced penalty framework changes the compliance calculus. Previously, the relatively modest penalties may not have provided sufficient incentive for full compliance. The revised penalty structure, combined with the company secretary certification requirement, creates a dual accountability mechanism that should improve filing rates and data quality.
Practitioners should also advise clients on the interaction between these rules and other beneficial ownership reporting obligations under the Prevention of Money Laundering Act, 2002, to ensure consistency across regulatory filings.