Section 90 of Companies Act, 2013: Who Really Owns the Company?
Ownership today isn’t what it used to be.
There was a time when companies were simple. One promoter. A few shareholders. Everything visible, everything traceable.
That world doesn’t exist anymore.
Today, ownership moves quietly through layers — holding companies, LLPs, trusts, overseas entities. On paper, everything looks neat. Clean. Lawful.
But behind the paperwork, the real decision-maker often stays hidden.
And that’s exactly why Section 90 of the Companies Act, 2013 exists.
It wasn’t created to complicate compliance.
It was created to uncover the truth.
To reveal who actually controls a company — even when that person never appears on the share register.
Why Section 90 Exists (And Why It Matters)
At some point, regulators realised something important.
When ownership is hidden, accountability disappears.
You can’t fix what you can’t see.
And you can’t regulate what you can’t identify.
Section 90 ensures companies know who is really pulling the strings, not just whose name appears on documents. It shuts doors that were earlier used for benami arrangements, shell structures, tax manipulation, and quiet control.
It also brings Indian corporate law closer to global transparency standards followed by organisations like the Financial Action Task Force (FATF).
In simple words — power should not hide behind paperwork.
Who Is a Significant Beneficial Owner (SBO)?
A Significant Beneficial Owner is not a company.
Not an LLP.
Not a trust.
It’s a real human being.
Someone who enjoys the benefits of ownership or control — directly or indirectly.
Even if their name never appears in official records.
If a person influences decisions, voting rights, or management, the law wants to know who they are.
Because ownership isn’t always loud.
Sometimes it whispers.
And Section 90 listens.
How Is an SBO Identified?
The law looks at things from two angles.
1. The Numbers Test
A person becomes an SBO if they hold, directly or indirectly:
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At least 10% of shares, or
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At least 10% of voting rights, or
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At least 10% entitlement to dividends or distributions
This includes holdings through companies, LLPs, trusts, or layered structures.
Even if ownership looks fragmented on the surface, the law connects the dots underneath.
2. The Influence Test
This is where things get interesting.
Even without touching the 10% mark, a person may still qualify as an SBO if they:
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Exercise significant influence, or
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Control management or policy decisions
This control may come from shareholder agreements, voting arrangements, or even informal understandings.
Not all power announces itself.
Some of it operates quietly.
Register of Significant Beneficial Owners
Every company must maintain a Register of Significant Beneficial Owners at its registered office.
This isn’t optional.
It’s a legal responsibility.
The register must capture:
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Name of the SBO
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Date of acquiring beneficial interest
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Nature and extent of control
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Declaration details submitted
It must remain updated and accessible as required under the law.
Declaration Obligations: What SBOs Must Do
If someone qualifies as an SBO, they must declare it — within the prescribed time.
This applies when:
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A person becomes an SBO for the first time, or
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There is any change in ownership or control
Delays don’t go unnoticed.
And silence isn’t forgiven.
Penalties can follow quickly when disclosures are ignored.
The Company’s Responsibility (Yes, It Matters Too)
Section 90 doesn’t let companies stay passive.
If a company has reason to believe someone is an SBO, it must ask questions.
Formal ones. Through proper notice.
Failing to act can expose both the company and its officers to penalties.
This is shared accountability.
No shortcuts. No assumptions.
Companies (Significant Beneficial Owners) Rules, 2018
Section 90 works alongside the SBO Rules, 2018.
These rules clarify:
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Which forms must be filed
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Timelines for disclosure
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How indirect holdings are traced
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Where exemptions apply
They also explain how SBO identification works in complex structures involving trusts, LLPs, and foreign entities.
Together, the law and the rules form a complete compliance framework.
Who Needs to Comply?
Almost everyone.
Section 90 applies to private companies, public companies, and listed entities.
Some limited exemptions exist — mostly for specific government entities — but they are narrow.
In most cases, applicability depends on ownership structure, not company size.
That’s why professional evaluation becomes critical.
How Section 90 Has Evolved
Over time, the law has only become stricter.
Thresholds have been refined.
Timelines shortened.
Penalties strengthened.
The message is clear now:
No ambiguity. No hiding behind complexity.
Regulators expect action — not explanations after the damage is done.
Penalties for Non-Compliance
Non-compliance doesn’t always start loud.
But it ends painfully.
Failure to disclose, incorrect declarations, or ignored notices can lead to serious consequences.
Voting rights may be frozen.
Dividend entitlements may disappear.
Once regulators step in, damage control becomes expensive — and sometimes irreversible.
This is not an area where shortcuts survive.
Why Section 90 Truly Matters
Section 90 is more than a legal provision.
It’s about trust.
About transparency.
About confidence in how businesses are run.
Companies that comply don’t just follow the law — they signal credibility and maturity.
And in today’s environment, that matters more than ever.
Final Thoughts
Section 90 of the Companies Act, 2013 requires companies to identify individuals who hold at least 10% beneficial interest or exercise significant control — even indirectly.
It blends numerical thresholds with real-world influence tests, ensuring that true ownership never stays hidden.
Understanding this provision is no longer optional.
It’s a core compliance responsibility.
Need Help With Section 90 or SBO Compliance?
If you need support with identifying SBOs, maintaining registers, or filing under the Companies (Significant Beneficial Owners) Rules, 2018, explore professional assistance at Callmyca.com.
