Foreign-owned Indian entities must trace their real human owners through every holding layer before they can file compliantly. The term people search for is UBO (Ultimate Beneficial Owner). India’s statute uses a different label: Significant Beneficial Owner (SBO). The obligation lives in Section 90 of the Companies Act, 2013, enforced by the Ministry of Corporate Affairs (MCA).
India built this regime to meet anti-money-laundering (AML) standards and Financial Action Task Force (FATF) transparency norms.
What Is UBO Filing in India?
India has no statute that uses the term UBO. UBO filing in India means complying with the Significant Beneficial Owner (SBO) framework under Section 90 of the Companies Act, 2013, and the Companies (Significant Beneficial Owners) Rules, 2018. The rules were amended in 2019 and 2023. The regime extended to Limited Liability Partnerships (LLPs) in 2023.
The governing instruments are specific. The Companies (SBO) Rules, 2018 were notified as G.S.R. 561(E) on 13 June 2018 (MCA). The Companies (SBO) Amendment Rules, 2019 (G.S.R. 100(E), 8 February 2019) added the indirect-holding architecture. The LLP (SBO) Rules, 2023 mirror the regime for LLPs.
Who Qualifies as a Significant Beneficial Owner (SBO) in India?
An SBO is an individual who, indirectly or together with direct holdings, holds at least 10% of shares, at least 10% of voting rights, or the right to at least 10% of distributable dividend, or who exercises significant influence or control. A purely direct holder is generally not an SBO. At least one indirect component is required.
This corrects a common misreading. Rule 2(1)(h), read with Explanation III of the 2019 amendment rules, requires an indirect holding or a direct-plus-indirect combination. “Significant influence” means the power to participate in the company’s financial and operating policy decisions, short of control (Rule 2(1)(i)). “Control” takes its meaning from Section 2(27) of the Companies Act, 2013: the right to appoint a majority of directors or to control management and policy decisions.
How Do You Identify an SBO in a Multi-Layer Structure?
Trace ownership through each member using the “acting through” tests in Explanation III to Rule 2(1)(h). The individual who counts depends on the member’s type. The table below maps each member type to the person treated as the indirect holder.
| Member type | Who is treated as the SBO |
|---|---|
| Body corporate | Individual holding a majority stake (over 50%) in the member or its ultimate holding company |
| HUF (Hindu Undivided Family) | The karta |
| Partnership firm | A partner, or the majority-stake holder in a body-corporate partner |
| Trust | Trustee (discretionary or charitable), beneficiary (specific), or settlor (revocable) |
| Pooled investment vehicle | General partner, investment manager, or CEO |
Source: Explanation III to Rule 2(1)(h), Companies (SBO) Rules, 2018 (as amended 2019).
Worked example that qualifies: an individual owns 60% of a foreign holding company, which owns 20% of the Indian subsidiary. The individual indirectly holds 12%, above 10%, so they are an SBO. Worked example that fails: an individual owns 40% of a body-corporate member. That falls short of the “majority stake” test, which Rule 2(1)(d) defines as more than one-half (over 50%) of equity capital, voting rights, or distributable dividend. No indirect holding passes through that member.
How Does India’s 10% SBO Threshold Compare Globally?
India’s 10% SBO threshold is among the lowest in major markets. Most peers use 25%. Commenda’s country guides break down the United States, United Kingdom, Singapore, and UAE regimes in detail.
| Country | Regime | Threshold | Source (as of) |
|---|---|---|---|
| India | SBO, Section 90, Companies Act, 2013 | 10% | Companies (SBO) Rules, 2018, MCA (2026) |
| United States | FinCEN Beneficial Ownership Information (BOI) | 25% or substantial control; reporting limited to foreign entities | FinCEN interim final rule, 21 March 2025 (snapshot 14 July 2026) |
| United Kingdom | Persons with Significant Control (PSC) | 25% | UK Companies House PSC regime (2026) |
| Singapore | Register of Registrable Controllers (RORC) | 25% | ACRA RORC regime (2026) |
| United Arab Emirates (UAE) | UBO regulations | 25% | UAE Cabinet Decision on UBO procedures (2026) |
Which Forms Are Required for UBO Filing: BEN-1, BEN-2, BEN-3, and BEN-4?
UBO filing in India uses four forms, not two. BEN-1 is the SBO’s declaration to the company. BEN-2 is the company’s return to the Registrar. BEN-3 is the SBO register the company maintains. BEN-4 is the company’s notice to suspected SBOs.
| Form | Who files or maintains it | Filed with | Purpose | Deadline |
|---|---|---|---|---|
| BEN-1 | The individual SBO | The reporting company | Declare significant beneficial ownership | Within 30 days of becoming an SBO or any change |
| BEN-2 | The reporting company | Registrar of Companies (RoC), MCA | Report the SBO declaration received | Within 30 days of receiving BEN-1 |
| BEN-3 | The reporting company | Held internally | Register of Significant Beneficial Owners | Maintained continuously; updated after each filing |
| BEN-4 | The reporting company | Sent to suspected members | Notice demanding SBO information | Issued whenever the company suspects an unreported SBO |
Source: Companies (SBO) Rules, 2018, Rules 3, 4, 5, and 2A. LLP equivalents (LLP BEN-1 to LLP BEN-4) exist under the LLP SBO rules covered below.
When Must a Company Issue a BEN-4 Notice?
A company must issue a BEN-4 notice when it has reason to believe a person is an SBO, has been one in the past three years, or has knowledge of an SBO, and that person is not registered. This is a proactive duty, not a passive one.
The recipient must respond within the time the notice sets. If the response is unsatisfactory or absent, the company applies to the National Company Law Tribunal (NCLT) under Section 90(7) for restrictions on the shares. Those restrictions include transfer bans and suspension of dividend and voting rights.
Who Needs to File UBO Declarations in India?
Private and public limited companies, Section 8 companies, One Person Companies (OPCs), LLPs (since 2023), and Indian subsidiaries and joint ventures of foreign groups must all file SBO declarations when an SBO is identified. There is no size-based carve-out. Foreign layers and trusts sit fully within scope.
Who Is Exempt From SBO Filing in India?
Rule 8 of the Companies (SBO) Rules, 2018 exempts specific holders from SBO determination. It covers government holdings, the Investor Education and Protection Fund (IEPF) Authority, a holding reporting company, and investment vehicles regulated by the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), or the Pension Fund Regulatory and Development Authority (PFRDA).
| Exempt holder | Note |
|---|---|
| IEPF Authority | Holdings excluded |
| The reporting company’s holding reporting company | Excluded, but disclosed in that company’s BEN-2 |
| Central or State Government, or government-controlled companies | Excluded |
| SEBI-registered vehicles: mutual funds, Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) | Excluded |
| Vehicles regulated by RBI, IRDAI, or PFRDA | Excluded |
Source: Rule 8, Companies (SBO) Rules, 2018.
What Are the BEN-2 Filing Deadlines and Fees?
File BEN-1 within 30 days of becoming an SBO or of any change. File BEN-2 within 30 days of receiving BEN-1. BEN-1 carries no government fee because it goes to the company, not the Registrar. BEN-2 carries a fee set by authorized share capital.
| Authorized share capital | Normal BEN-2 fee | Source |
|---|---|---|
| Less than ₹1 lakh | ₹200 | Companies (Registration Offices and Fees) Rules, 2014 |
| ₹1 lakh to under ₹5 lakh | ₹300 | Companies (Registration Offices and Fees) Rules, 2014 |
| ₹5 lakh to under ₹25 lakh | ₹400 | Companies (Registration Offices and Fees) Rules, 2014 |
| ₹25 lakh to under ₹1 crore | ₹500 | Companies (Registration Offices and Fees) Rules, 2014 |
| ₹1 crore and above | ₹600 | Companies (Registration Offices and Fees) Rules, 2014 |
Late filing multiplies the normal fee by the delay band.
| Delay beyond due date | Additional fee | Source |
|---|---|---|
| Up to 30 days | 2x normal fee | Companies (Registration Offices and Fees) Rules, 2014 |
| 30 to 60 days | 4x normal fee | Companies (Registration Offices and Fees) Rules, 2014 |
| 60 to 90 days | 6x normal fee | Companies (Registration Offices and Fees) Rules, 2014 |
| 90 to 180 days | 10x normal fee | Companies (Registration Offices and Fees) Rules, 2014 |
| More than 180 days | 12x normal fee | Companies (Registration Offices and Fees) Rules, 2014 |
For historical context, when the 2019 amendment took effect, existing SBOs filed BEN-1 within a one-time 90-day window, by 8 May 2019.
What Are the Penalties for UBO Non-Compliance in India?
Penalties hit both the individual and the company. Section 90(10) and 90(11), as amended by the Companies (Amendment) Act, 2020, set the amounts. The company also faces NCLT-ordered restrictions on the relevant shares.
| Party | Penalty | Continuing default | Cap | Source |
|---|---|---|---|---|
| Individual SBO (fails to file BEN-1) | ₹50,000 | ₹1,000/day | ₹2,00,000 | Section 90(10), Companies Act, 2013 |
| Reporting company (register or BEN-2 failure) | ₹1,00,000 | ₹500/day | ₹5,00,000 | Section 90(11), Companies Act, 2013 |
| Every officer in default | ₹25,000 | ₹200/day | ₹1,00,000 | Section 90(11), Companies Act, 2013 |
Non-monetary consequences bite too. NCLT restrictions freeze the shares, and missing SBO records create friction in bank onboarding and investor diligence.
How Do You File BEN-2 for a Foreign-Owned Company?
Map the chain, trace to the natural persons, and file within 30 days. A foreign-owned Indian entity follows a six-step workflow.
- Map the full ownership chain above the Indian entity, from the immediate parent to the ultimate individuals.
- Apply the “acting through” tests at each layer to find natural persons who cross 10% or hold control.
- Issue BEN-4 to suspected SBOs and to non-individual members that may conceal one.
- Collect BEN-1 from each SBO, with cross-border KYC (Know Your Customer) evidence.
- File BEN-2 on the MCA portal with the SBO’s details.
- Update the BEN-3 register and refile within 30 days of any change.
Foreign structures create friction. Overseas registers are often opaque, and beneficial-ownership definitions conflict across countries. Non-resident owners are frequently slow to complete KYC.
What Documents Do You Need for UBO Filing in India?
You need identity, tax, and structure evidence. Two document sets carry the filing.
Individual KYC:
- Full name, date of birth, and nationality
- Permanent and present addresses
- PAN for residents; passport for foreign nationals
- Percentage and nature of the interest held
- Date of becoming an SBO
Structure evidence:
- Ownership and control charts across every layer
- Foreign incorporation documents
- Share registers
- Trust deeds
- Shareholder and control agreements
How Do the LLP SBO Rules 2023 Work?
The LLP (SBO) Rules, 2023, notified by the MCA on 9 November 2023 as G.S.R. 832(E), extend the SBO regime to LLPs. The forms mirror company forms (LLP BEN-1 to LLP BEN-4). The 10% test applies to contribution, voting or management rights, or distributable profits instead of shares.
Existing LLP SBOs had a 90-day window to file Form LLP BEN-1 after the rules commenced. Most competitor guides predate this rule and miss it entirely.
How Do PMLA, FATF, and Income-tax Definitions Differ From SBO Rules?
India has multiple beneficial-owner definitions with different thresholds and purposes. Only the Section 90 SBO regime triggers MCA filings. The Prevention of Money Laundering Act (PMLA) sets a separate beneficial-owner definition for KYC by reporting entities such as banks. The Income-tax Act uses beneficial ownership only for tax matters.
FATF alignment is the policy driver behind the SBO regime, following FATF Recommendations 24 and 25 on beneficial ownership. The Income-tax Act’s beneficial-ownership concepts, such as foreign-asset reporting and return-filing provisos, serve tax purposes only. They create no SBO or MCA filing obligation.
How Commenda Helps With UBO Filing in India
Commenda’s entity management platform gives foreign-owned Indian entities certainty over UBO filing. It runs standardized workflows for Indian subsidiaries, maintains the BEN-3 SBO register, stores KYC documents securely, and tracks filing deadlines for BEN-1, BEN-2, and the LLP SBO forms.
Pair it with Commenda’s compliance calendar to track every BEN deadline, and the global tax ID verification tool for cross-border KYC checks.
Book a demo to get a beneficial-ownership review of your India entity structure at commenda.io/book-a-demo.
