Which declaration is required to be filed by SBO under section 89 of the Companies Act 2013

Which declaration is required to be filed by SBO under section 89 of the Companies Act 2013. As per section 89 (5), if any person fails to make a declaration as required under sub section (1) or sub section (2) or sub section ( 3), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day after the first  during which  such failure continues, subject to a maximum of 5 Lakh rupees.
As per provisions of section 89 (1) of the companies Act where the name of a person is entered in the register of members of a company as the holder of shares in that company but who do not hold the beneficial interest in such shares, such person shall make a declaration within such period and in such form as may be prescribed to the company  specifying the name and other particulars of the person who hold the beneficial interest in such shares.
As per section 89(7) if a company is required to  file a return under sub section (6), fail to do so before the expiry of the time specified therein, the company and every officer of the company  who is in default shall be liable to a penalty of one thousand rupees for each day during which  such failure continues, subject to a maximum penalty of five lakh rupees  in case of company and two lakh rupees in case of an officer who is in default
Applicable Provisions
The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD 
In Yapp India Automotives Systems Private Limited, ROC vide adjudication order dated 19/12/2023 held the appellants and their officers who have defaulted, liable for penalty  under section 89(5) & (7) of the Act from 21/12/2020 to 25/05/2023 for non-filling  of declaration as per section 187-C(!)  of the companies Act 1956 r/w the companies (Declaration of Beneficial Interest in shares) Rules 1975 r/w Companies (Significant Beneficial Owner)  Rules, 2018 of the companies Act 2013.
Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 28/05/2024. The authorised representative stated that the:

Since no individual is Significant Beneficial Owner (directly or indirectly) in YAPP, the applicant company is not contravention of the provisions of section 89 of the companies Act 2013.

It is further stated that YAPP is a law-abiding entity and has always complied with all the provisions of the Act in letter and spirit. Despite having not breached any of the provisions of the Act, the company has Suo moto decided to take corrective action to compound the offence.

Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty as follows:
Penalty as per Section 89(5) of the companies Act 2013:

No. of days default

Penalty imposed on company/Directors(s)

Default continues

Total maximum penalty

From 21/12/2020 to 25/05/2023

Yapp India Automotive Systems Co. Ltd

50,000 + 200*885= 2,27,000

2,27,000

Yapp Automotive Parts FFoshan Co. Ltd

50,000 + 200*885= 2,27,000

2,27,000

Penalty as per section 89(7) of the companies Act 2013:

No. of days default

Penalty imposed on company/Directors(s)

Default continues

Total maximum penalty

From 21/12/2020 to 25/05/2023 = 885 days

Yapp India Automotive Systems Co. Ltd

1000*885 =8,85, 000

5,00,000

Huazhu Chen (Executive Director)

1000*885 =8,85, 000

2,00,000

From 03/06/2021 to 25/05/2023

Sangeeta Devendra Kulkarni(Company Secretary)

1000*721 = 7,21,000

2,00,000

From 21/12/2020 to 11/05/2021

Suhas Ganpat Naik

1000*141 = 1,41,000

1,41,000

Reduction in Penalties, If any
Taking into account the adjudication order of the ROC, submission made by the appellant in their application as well as oral submissions of the authorised representative during the hearing RD is of view that, there is no merit in the appeal and accordingly the adjudication order dated 19/12/2023 passed by ROC, Pune is confirmed.
Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides relief to Small Companies and Start-ups by reducing penalties for certain non-compliances. As per this provision, if such a company commits a default, the penalty shall not exceed half of the standard amount, subject to a cap. This aims to promote ease of doing business and reduce the compliance burden. However, in the adjudication matter of Yapp India Automotive Systems Private Limited, the company does not qualify for the reduced penalty benefit under Section 446B. Penal provisions for Small and Start-up companies are framed to encourage compliance without being overly punitive, fostering a supportive regulatory environment.

To conclude:
In the adjudication matter concerning Yapp India Automotives Systems Private Limited, it is evident that the company, along with its officers, was found in default for failing to comply with the provisions of Section 89 of the Companies Act, 2013, regarding the declaration of beneficial ownership. Despite the company's claim of being a law-abiding entity and having no significant beneficial owners, the default continued for a significant period, from 21/12/2020 to 25/05/2023, which led to the imposition of penalties. The appeal made by the company to the Regional Director (RD) did not provide sufficient grounds to merit a reduction or waiver of the penalties imposed. The RD, after considering all the submissions and facts, upheld the adjudication order passed by the Registrar of Companies (ROC).
Download MCA Adjucation Order

As per section 89 (5), if any person fails to make a declaration as required under sub section (1) or sub section (2) or sub section ( 3), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day after the first during which such failure continues, subject to a maximum of 5 Lakh rupees.

As per provisions of section 89 (1) of the companies Act where the name of a person is entered in the register of members of a company as the holder of shares in that company but who do not hold the beneficial interest in such shares, such person shall make a declaration within such period and in such form as may be prescribed to the company specifying the name and other particulars of the person who hold the beneficial interest in such shares.

As per section 89(7) if a company is required to file a return under sub section (6), fail to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be liable to a penalty of one thousand rupees for each day during which such failure continues, subject to a maximum penalty of five lakh rupees in case of company and two lakh rupees in case of an officer who is in default

Applicable Provisions

The MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

In Yapp India Automotives Systems Private Limited, ROC vide adjudication order dated 19/12/2023 held the appellants and their officers who have defaulted, liable for penalty under section 89(5) & (7) of the Act from 21/12/2020 to 25/05/2023 for non-filling of declaration as per section 187-C(!) of the companies Act 1956 r/w the companies (Declaration of Beneficial Interest in shares) Rules 1975 r/w Companies (Significant Beneficial Owner) Rules, 2018 of the companies Act 2013.

Considering the fact and circumstances of the case, Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 28/05/2024. The authorised representative stated that the:

Since no individual is Significant Beneficial Owner (directly or indirectly) in YAPP, the applicant company is not contravention of the provisions of section 89 of the companies Act 2013.
It is further stated that YAPP is a law-abiding entity and has always complied with all the provisions of the Act in letter and spirit. Despite having not breached any of the provisions of the Act, the company has Suo moto decided to take corrective action to compound the offence.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty as follows:

Penalty as per Section 89(5) of the companies Act 2013:

No. of days default	Penalty imposed on company/Directors(s)	Default continues	Total maximum penalty
From 21/12/2020 to 25/05/2023	Yapp India Automotive Systems Co. Ltd	50,000 + 200*885= 2,27,000	2,27,000
From 21/12/2020 to 25/05/2023	Yapp Automotive Parts FFoshan Co. Ltd	50,000 + 200*885= 2,27,000	2,27,000

Penalty as per section 89(7) of the companies Act 2013:

No. of days default	Penalty imposed on company/Directors(s)	Default continues	Total maximum penalty
From 21/12/2020 to 25/05/2023 = 885 days	Yapp India Automotive Systems Co. Ltd	1000*885 =8,85, 000	5,00,000
From 21/12/2020 to 25/05/2023 = 885 days	Huazhu Chen (Executive Director)	1000*885 =8,85, 000	2,00,000
From 03/06/2021 to 25/05/2023	Sangeeta Devendra Kulkarni(Company Secretary)	1000*721 = 7,21,000	2,00,000
From 21/12/2020 to 11/05/2021	Suhas Ganpat Naik	1000*141 = 1,41,000	1,41,000

Reduction in Penalties, If any

Taking into account the adjudication order of the ROC, submission made by the appellant in their application as well as oral submissions of the authorised representative during the hearing RD is of view that, there is no merit in the appeal and accordingly the adjudication order dated 19/12/2023 passed by ROC, Pune is confirmed.

Any Benefit of Section 446B of Companies Act

To conclude:

In the adjudication matter concerning Yapp India Automotives Systems Private Limited, it is evident that the company, along with its officers, was found in default for failing to comply with the provisions of Section 89 of the Companies Act, 2013, regarding the declaration of beneficial ownership. Despite the company's claim of being a law-abiding entity and having no significant beneficial owners, the default continued for a significant period, from 21/12/2020 to 25/05/2023, which led to the imposition of penalties. The appeal made by the company to the Regional Director (RD) did not provide sufficient grounds to merit a reduction or waiver of the penalties imposed. The RD, after considering all the submissions and facts, upheld the adjudication order passed by the Registrar of Companies (ROC).