No Penalty for Non-Filing of BEN-2: MCA Accepts Explanation as Foreign Shareholder Dissolved Before SBO Compliance Window [Read Order]
Accepting this explanation, the Adjudicating Officer held that the company’s submission was “tenable” and concluded that no default existed, given the dissolution of the foreign shareholder before the due date of SBO compliance
Foreign Shareholder
Foreign Shareholder
The Ministry of Corporate Affairs ( MCA ) has declined to levy any penalty for non-filing of Form BEN-2, after accepting the company’s explanation that its foreign shareholder required to be reported as a Significant Beneficial Owner ( SBO ) had been dissolved even before the compliance window under the SBO Rules became operational.
According to the adjudication order issued by the Registrar of Companies ( ROC ), the company had not filed BEN-2 despite M/s Samvidhana Inc., a foreign body corporate, holding 53.29% of its equity shares and by falling within the scope of Explanation III to Rule 2(1)(h) of the Companies (Significant Beneficial Owners) Rules, 2018.
MCA records indicated a technical violation of Section 90 of the Companies Act, 2013, prompting issuance of an e-adjudication notice and an e-hearing on 27 February 2025.
During the hearing, the company clarified that Samvidhana Inc. had been dissolved on 13 December 2018, within six months of the SBO Rules coming into effect on 13 June 2018 and well before completion of the first compliance cycle.
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It was submitted that since the shareholder ceased to exist prior to the statutory compliance window, the company was incapacitated from obtaining declarations or fulfilling BEN-2 reporting obligations, making compliance impossible.
The authorised representative argued that the requirement to file BEN-2 did not arise in such circumstances, and therefore no violation under Section 90(11) could be attributed.
Accepting this explanation, the Adjudicating Officer held that the company’s submission was “tenable” and concluded that no default existed, given the dissolution of the foreign shareholder before the due date of SBO compliance.
Accordingly, the ROC imposed a nil penalty on the company and all its directors, while still requiring rectification of any procedural aspects within 90 days if applicable.
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