12 October 2023
Hi, Please tell me: A Ltd is the holding company and B ltd is subsidiary company A ltd is holding 90% shares in B ltd. B ltd has no members who have more than 10%. But A ltd, who is the holding company of B ltd has 3 members who has shares more than 10%.
Is there a need to file ben-2 with respect to below explanation as per section 90 CA, 2013?
*Non-Applicability The above rules shall not apply to such shares of the reporting entity as held by the following entities: Holding company of the reporting entity. However, the details of the holding company shall be reported in Form No. BEN-2*
Explanation III - For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member of the reporting company, namely: -
(i) where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual,
(a) holds majority stake in that member; or
(b) holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member;
11 July 2024
Based on the information provided, here's the analysis regarding whether Form BEN-2 needs to be filed by A Ltd:
1. **Holding Company Exemption**: As per Explanation III under Section 90 of the Companies Act, 2013, the requirement to file Form BEN-2 does not apply to shares held by the holding company of the reporting entity (B Ltd, in this case). Therefore, A Ltd, being the holding company of B Ltd, is exempt from filing Form BEN-2 for its holdings in B Ltd.
2. **Ownership Structure**: - A Ltd holds 90% shares in B Ltd. - B Ltd has no members holding more than 10% individually. - However, A Ltd itself has three members who individually hold shares in A Ltd exceeding 10%.
3. **Application of BEN-2 Filing**: - Since B Ltd is the reporting entity and A Ltd is its holding company, A Ltd is exempt from reporting its shareholding in B Ltd in Form BEN-2. - The exemption applies because A Ltd qualifies as the holding company under the Companies Act, 2013.
4. **Conclusion**: - A Ltd does not need to file Form BEN-2 with respect to its shareholding in B Ltd. - Even though A Ltd has members holding more than 10% in A Ltd itself, the requirement to file BEN-2 is specifically waived for the holding company concerning its subsidiaries.
Therefore, based on the exemption provided under Section 90 of the Companies Act, 2013, A Ltd does not have to file Form BEN-2 for its shareholding in B Ltd. This exemption is because A Ltd is the holding company of B Ltd.
CAclubindia
