AMENDMENTS BY THE MINISTRY OF CORPORATE AFFAIRS – UPDATES PERTAINING TO FORM BEN-2, FORM MGT-6 AND E-FORM DIR-3 KYC

INTRODUCTION

The Ministry of Corporate Affairs (“MCA”) has issued several notifications, amending the following rules –

1. Companies (Significant Beneficial Owners) Rules, 2018, which have been amended in respect of the return of significant beneficial owners of the company.
2. Companies (Management and Administration) Rules, 2014, which have been amended in respect of the declaration in respect of beneficial interest; and
3. Companies (Appointment and Qualification of Directors) Rules, 2014, which have been amended in respect of update of the director’s personal mobile number or the email address during a financial year.

Accordingly, the following are the key amendments introduced by the MCA -

• Companies (Significant Beneficial Owners) Amendment Rules, 2024[i]

The MCA issued the Companies (Significant Beneficial Owners) Amendment Rules, 2024 vide notification no. G.S.R 404(E) dated July 15, 2024 (“Significant Beneficial Owner Amendment Rules”), to further amend the Companies (Significant Beneficial Owners) Rules, 2018 and the said amendments shall come into force from the date of publication in the Official Gazette, i.e., July 16, 2024. The major change introduced through the Significant Beneficial Owner Amendment Rules pertains to the substitution of the existing Form BEN-2 (Return to the Registrar in respect of declaration under Section 90). Section 90 of the Companies Act, 2013 (the “Act”) provides for the register of significant beneficial owners in a company, and Section 90(4) of the Act mandates a company to file return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed. Accordingly, Form BEN-2 had been introduced pursuant to the requirement under Section 90(4) of the Act.

Through the Significant Beneficial Owner Amendment Rules, Form BEN-2 has been replaced with a new form, thereby streamlining the process of declaration of significant beneficial ownership. This new form emphasises on comprehensive documentation and digital signatures from the authorised personnel, thereby ensuring the accuracy of the information provided through verification by a practicing-chartered accountant, cost accountant or company secretary.

• Companies (Management and Administration) Amendment Rules, 2024[ii]

The MCA issued the Companies (Management and Administration) Amendment Rules, 2024 vide notification no. G.S.R 403 dated July 15, 2024 (“Management and Administration Amendment Rules”), to further amend the Companies (Management and Administration) Rules, 2014 and the said amendment shall come into force from the date of publication in the Official Gazette, i.e., July 16, 2024. The key change introduced through the Management and Administration Amendment Rules is in relation to the substitution of the existing Form MGT-6 (Return to the Registrar in respect of declaration under section 89 received by the company). This Form MGT-6 provides for the return to be filed with the Registrar in relation to the declaration of beneficial interest in shares. All declarations and changes in beneficial interest are accurately to be reported by companies under Form MGT-6. Section 89 of the Act provides for the declaration in respect of beneficial interest in any share, and Section 89(6) of the Act mandates that where any declaration in respect of beneficial interest is to be made, the company shall make a note of such declaration in the register concerned and shall file a return with the Registrar in respect of such declaration within thirty days from the date of receipt of declaration, with such fees or additional fees as may be prescribed. Accordingly, Form MGT-6 had been introduced pursuant to the requirement under Section 89(6) of the Act.

Through the Management and Administration Amendment Rules, Form MGT-6 has been replaced with a new form, thereby enhancing efficiency and transparency of corporate management and administration and thereby streamlining the reporting and compliance processes for companies. It further seeks to provide more detailed and structured information.

• Companies (Appointment and Qualification of Directors) Amendment Rules, 2024[iii]

The MCA issued the Companies (Appointment and Qualification of Directors) Amendment Rules, 2024 vide notification no. G.S.R 412(E) dated July 16, 2024 (“Appointment and Qualification of Directors Amendment Rules”), to further amend the Companies (Appointment and Qualification of Directors) Rules, 2014 and the said amendments shall come into force from August 1, 2024. The notable changes brought in vide the Appointment and Qualification of Directors Amendment Rules are as follows -

Rule 12A pertains to the directors KYC and provides that every individual holding a director identification number as on March 31 of a financial year shall submit an e-form DIR-3-KYC to the Central Government. The Appointment and Qualification of Directors Amendment Rules clarifies that such submission shall be made on or before September 30 of the financial year.

Further, the Appointment and Qualification of Directors Amendment Rules provides through an insertion of proviso to Rule 12A therein, that in the event that a director intends to update their personal mobile number or the email address again at any time during the financial year, such director shall update the same by submitting e-form DIR-3 KYC on payment of fees of INR 500 (Rupees Five Hundred Only).

CONCLUSION

In this manner, the MCA has sought to provide clarity while making the process of filing of forms more transparent and accurate. It seeks to emphasise on comprehensive documentation and digital signatures from the authorised personnel, ensuring accuracy of data provided under the form BEN-2. Further, it aims at enhancing efficiency and transparency of corporate management and administration through the replacement of the existing MGT-6. It has also sought to provide operational flexibility to the companies by permitting the directors to update their personal information through submission of e-form DIR-3 KYC on payment of a nominal fee.

[i] https://www.mca.gov.in/bin/dms/getdocument?mds=S3dBrxv6fJnMAAq504cuag%253D%253D&type=open

[ii] https://www.mca.gov.in/bin/ebook/dms/getdocument?doc=NDU5OTg0NDY0&docCategory=NotificationsAndCirculars&type=open

[iii] https://www.mca.gov.in/bin/dms/getdocument?mds=mC5cB95CPxV7kH2cdGeoAA%253D%253D&type=open