Declaration in respect of beneficial interest in any share:

According to section 89 of the Companies Act, 2013, a declaration is to be given to the company by any person who is a member but not holding the beneficial interest in such shares. The provisions says that-

1. Person who does not hold the beneficial interest in share: Where the name of a person is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares, such person shall make a declaration within such time and in such form as may be prescribed to the company specifying the name and other particulars of the person who holds the beneficial interest in such shares. [Section 89(1)]

2. Person who holds or acquires a beneficial interest in share: Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. [Section 89(2)]

3. Change in the beneficial interest: Where any change occurs in the beneficial interest in such shares, the person who does not hold the beneficial interest in such shares (referred to in pt 1.) and the beneficial owner (specified in pt 2.) shall, within a period of 30 days from the date of such change, make a declaration to the company in such form and containing such particulars as may be prescribed. [Section 89(3)]

4. Power of Central Government to make rules: The Central Government may make rules to provide for the manner of holding and disclosing beneficial interest and beneficial ownership under this section.

5. Penalty: If any person fails, to make a declaration as required under section 89(1) or section 89(2) or section 89(3), without any reasonable cause, he shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.

6. Filing of return: Where any declaration under this section is made to a company, the company shall make a note of such declaration in the register concerned and shall file, within thirty days from the date of receipt of declaration by it, a return in the prescribed form with the Registrar in respect of such declaration with such fees or additional fees as may be prescribed, within the time specified under section 403.

7. Penalty in case of non filing of return: If a company, required to file a return, fails to do so before the expiry of the time specified under the first proviso to sub-section (1) of section 403, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than five hundred rupees but which may extend to one thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues.

8. No claim of right related to any share: No right in relation to any share in respect of which a declaration is required to be made under this section but not made by the beneficial owner, shall be enforceable by him or by any person claiming through him.

9. No effect on the obligation of a company to pay dividend: Nothing in this section shall be deemed to prejudice the obligation of a company to pay dividend to its members under this Act and the said obligation shall, on such payment, stand discharged.

As per the Companies (Management & Administration) Rules, 2014, where any declaration under section 89 is received by the company, the company shall make a note of such declaration in the register of members and shall file, within a period of 30 days from the date of receipt of declaration by it, a return with the registrar in respect of such declaration with fee.

According to the Companies (Management and Administration) Second Amendment Rules, 2014 through Notification dated 24th of July, 2014, a proviso is inserted below the above para [i.e. under Rule 9(3)] stating:—

“Provided that nothing contained in this rule with respect to section 89 of the Companies Act, 2013 shall apply in relation to a trust which is created, to set up a Mutual Fund or Venture Capital Fund or such other fund as may be approved by the Securities and Exchange Board of India”.