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Business, Compliance

Your Indian company isn't held in your name, it's held in your holding company's. MCA still wants you named

Routing your shares through an overseas LLC or holding company for tax, estate or investor reasons doesn't make the ownership question go away. It just moves it one filing deeper: Form BEN-2, and MCA has real, published penalties for skipping it.

You hold your Indian company's shares through an overseas entity, an LLC, a holding company, sometimes a trust, rather than in your own name, often on a lawyer's or accountant's advice for tax or succession reasons abroad. The assumption is that since the registered shareholder is a corporate entity, properly incorporated and registered wherever it sits, the ownership disclosure is satisfied. It isn't. The Companies Act requires MCA to know the actual person behind that entity, and the disclosure obligation doesn't stop at the corporate shareholder on the register.
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Last reviewed: 5 September 20265 min readReviewed by Preetesh Maloo, CA

The short answer

If your Indian company's shares are held by an overseas LLC, holding company, or trust rather than by you personally, Section 90 of the Companies Act still requires the company to identify and report you. Anyone who ultimately holds, directly or through any number of layers, 10% or more of the shares, voting rights, or right to receive distributions, is a significant beneficial owner and must file a declaration; the company then reports it to the Registrar on Form BEN-2 within 30 days. Skip it, and MCA's own penalty orders are real: a company can be fined up to Rs 5,00,000, and every officer in default up to Rs 1,00,000, both growing for every day the filing stays missing.

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Related situations

A foreign holding entity doesn't satisfy the disclosure, it adds a layer to look through

Section 90 was written for exactly this structure. Its whole purpose is to look through a corporate, trust, or pooled-vehicle shareholder to the natural person who actually controls or benefits from the stake, because a company register that only shows another company's name tells the Registrar nothing about who's really there. An overseas holding entity being properly registered and compliant in its own jurisdiction has no bearing on this; the Indian filing obligation runs independently of whatever paperwork exists abroad.

The 10% test, and the BEN-1 to BEN-2 sequence

The threshold is 10%, of shares, voting rights, or the right to receive distributions, whichever is higher, counting direct and indirect holding together. Multiple layers between you and the Indian company don't reduce this: a trust owned by a holding company that owns the shares still traces back to you if you're the one who ultimately controls or benefits from it.

Once that's established, you as the individual file a BEN-1 declaration with the company; the company then files Form BEN-2 with the Registrar within 30 days of receiving it. If genuinely no individual meets the criteria after a proper enquiry, the rules deem the company's senior managing official the significant beneficial owner instead, so the register is never simply left blank.

What goes wrong without a CA

The recurring pattern: the holding structure was set up correctly for tax and succession purposes, but nobody separately asked whether it triggered a BEN-1/BEN-2 disclosure on the Indian company's side, because it doesn't look like an Indian compliance question at all, it looks like a foreign-entity matter. It surfaces later, usually at a funding round's diligence or a routine ROC scrutiny. MCA's real adjudication orders show the exposure scales hard with time: penalties in the range of a couple of lakh rupees for a filing found several months late, climbing toward the statutory caps once the gap stretches past a year, for the company and personally for the officer in default.

What's involved

What the CA actually does

  1. 1

    We trace the real ownership chain

    We map who ultimately holds 10% or more through your holding entity or trust structure, so we know exactly who has to file the BEN-1 declaration, however many layers sit between that person and the Indian company.

  2. 2

    We file BEN-1 and BEN-2 correctly and on time

    We prepare the significant beneficial owner's declaration and the company's Form BEN-2 within the 30-day window, and keep the register current whenever the ownership structure changes.

  3. 3

    We fix a filing that was never made

    If the disclosure was missed, we get it filed and manage the penalty conversation with MCA, so the daily continuing-default amount stops growing rather than compounding further while it's left unaddressed.

What to have ready

Documents you'll typically need

  • The Indian company's full ownership chain, down to the individual behind any overseas holding entity or trust
  • Constitutional or governance documents of the overseas holding entity, showing who owns or controls it
  • Any BEN-1 or BEN-2 filings already made
  • The company's current shareholding register or cap table

References on this page

  • Section 90, Companies Act 2013, read with the Companies (Significant Beneficial Owners) Rules 2018: an individual holding, directly or indirectly through a body corporate, trust, or pooled vehicle, 10% or more of shares, voting rights, or the right to receive distributions, or otherwise exercising significant influence or control, is a significant beneficial owner
  • Form BEN-1 (the significant beneficial owner's declaration to the company) and Form BEN-2 (the company's filing with the Registrar), due within 30 days of receiving the BEN-1 declaration
  • Section 90(11), as substituted by the Companies (Amendment) Act 2020 (effective 21 December 2020): company penalty of Rs 1,00,000 plus Rs 500 for each day of continuing default, capped at Rs 5,00,000; every officer in default penalised Rs 25,000 plus Rs 200 per day, capped at Rs 1,00,000
  • Rule 8, Companies (Significant Beneficial Owners) Rules 2018: where no individual can be identified as the significant beneficial owner after reasonable enquiry, the company's senior managing official is deemed the significant beneficial owner for the register
  • Real MCA adjudication orders exist for exactly this gap, companies fined in the low lakhs, cumulative across the company and its officers, for BEN-2 filed months to over a year late

Frequently asked questions

Common questions

Yes. Section 90 looks through the LLC to you as the individual who ultimately holds the stake. You file a BEN-1 declaration and the company files Form BEN-2; the LLC's own shareholding on the register doesn't substitute for that.

It doesn't change the outcome. The look-through goes through every layer to the natural person at the end of the chain, however many entities sit in between, as long as that person's ultimate interest crosses 10%.

Real cases run into several lakh rupees once the gap stretches past a year, since the penalty compounds daily for both the company and the officer in default. Filing now stops it from growing further; it won't erase what's already accrued, but it ends the ongoing exposure.

No. The 10% threshold, on shares, voting rights, or distribution rights, whichever is higher, and counting direct and indirect holding together, is what triggers the disclosure obligation.

Related

If this matched your situation, these go further

Setting up an Indian private limited company as an NRI founderKeeping your NRI-owned Indian company compliant with the ROC each yearOpening your company's bank account is a beneficial-owner problem, not a signatory oneYour company can't issue new shares, ESOPs, or a rights issue, until your foreign parent's own shares are dematerialisedYou're giving shares in your company to a cousin, a partner, or a co-founder. That's not automatically the tax-free gift it feels likeYour Indian company, majority foreign-owned, is investing in another Indian company. That's not a domestic deal, it's indirect FDI

Is your Indian company held through an overseas LLC, holding company, or trust?

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