2020 (1) TMI 1267 - Tri - Companies Law

Tribunal orders disclosure of Significant Beneficial Owners in Companies Act case

J.P. Financial Services Private Limited Versus Golden Tobacco Ltd.

J.P. Financial Services Private Limited Versus Golden Tobacco Ltd. - TMI Issues Involved:1. Applicability of Section 90 of the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018.2. Compliance with the disclosure requirements for Significant Beneficial Owners (SBO).3. Petition for placing restrictions on shares due to non-compliance.4. Respondent's defense regarding the applicability of Section 90.5. Interim relief and rejection of the petition.Detailed Analysis:1. Applicability of Section 90 of the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018:The judgment begins by establishing the context of the case, where M/s. Golden Tobacco Ltd. filed a petition under Section 90 of the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018, against M/s. J.P. Financial Services Pvt. Ltd. The concept of Significant Beneficial Owners (SBO) was introduced to curb illegitimate activities and identify natural persons controlling a corporate entity. The amended rules require individuals with indirect rights or entitlements in a company to disclose their significant beneficial ownership.2. Compliance with the Disclosure Requirements for Significant Beneficial Owners (SBO):The judgment details the disclosure requirements under the Rules, such as filing a declaration in Form No. BEN-1 by individuals who are SBOs within 90 days from the commencement of the rules. Companies must file Form No. BEN-2 with the Registrar within 30 days of receiving such declarations. The onus is on the Reporting Company to identify SBOs and ensure compliance by issuing notices in Form No. BEN-4 to members holding at least 10% of shares or voting rights.3. Petition for Placing Restrictions on Shares Due to Non-Compliance:M/s. Golden Tobacco Ltd. issued a notice in Form No. BEN-4 to M/s. J.P. Financial Services Pvt. Ltd., which holds 25% shares of the Applicant Company, seeking information on SBOs. Upon receiving no response, the Applicant approached the Tribunal under Section 90(7) for directions to place restrictions on the shares of M/s. J.P. Financial Services Pvt. Ltd. due to non-compliance with the disclosure requirements.4. Respondent's Defense Regarding the Applicability of Section 90:The Respondent argued that the amendment to Section 90 was not applicable to them and that they had acquired the shares in compliance with an order from the Hon'ble Supreme Court. They contended that no declaration was required under Section 90 and that the Applicant must demonstrate reasonable cause for issuing the notice and filing the petition. The Respondent also suggested that the Applicant was attempting to block their voting rights due to a perceived threat from the Respondent Company.5. Interim Relief and Rejection of the Petition:During the pendency of the petition, the Respondent filed an application (IA 616 of 2019) seeking vacation of interim relief and/or rejection of the petition. The Tribunal found that the grounds in the IA were identical to those in the reply to the petition and dismissed the IA for lack of merit.Findings:The Tribunal noted that the application was due to the Respondent's failure to furnish information in Form BEN-1. The Tribunal reiterated the amended rules requiring SBOs to file declarations and the Reporting Company to file Form No. BEN-2. The Tribunal found that the Respondent, being a corporate member holding 25% shares, was mandated to provide details of SBOs.The Respondent disclosed its shareholding pattern, indicating no individual held more than 10% of the shares, and affirmed no ultimate holding company existed. The Tribunal directed the Respondent to ensure recognition of SBOs and cause them to make necessary disclosures to avoid penal action.Conclusion:The Tribunal disposed of CP 82 of 2019 with observations and dismissed IA 616 of 2019. The interim order would be vacated upon compliance by the Respondent in filing Form No. BEN-1. The time consumed in the matter was exempted for statutory compliance purposes, and no costs were awarded.