Significant beneficial owners when a foreign parent owns your Indian company

Short answer: Section 90 of the Companies Act requires every Indian company to identify the individuals who ultimately hold 10% or more of its shares, votes or distributions, or who exercise significant influence or control. Where the shareholder is a foreign parent, the test looks through it: an individual with a majority stake in the parent, or in the parent's ultimate holding company, is treated as holding what the parent holds. Each such individual declares in BEN-1, the company files BEN-2 within 30 days, and keeps a register in BEN-3. There is no exemption for a parent listed abroad in these rules.

Who counts

A significant beneficial owner is an individual who, alone or together with others, holds any one of these in the Indian company:

Three points decide most cases. It is always an individual — a company is never the significant beneficial owner. "Not less than 10%" includes exactly 10%. And the fourth limb has no percentage at all: a shareholders' agreement giving someone the right to appoint the board can make them a significant beneficial owner with a small holding or none.

Looking through the foreign parent

The rules deal expressly with a member that is a body corporate, whether incorporated in India or abroad. An individual holds indirectly through that member if they hold a majority stake — more than half of the equity, the voting rights, or the right to distributions — either in the member itself or in its ultimate holding company.

For a subsidiary wholly owned by a foreign parent, that works out as follows:

The middle row is the one to be careful with. Three founders with 40%, 35% and 25% of the parent each indirectly sit behind well over 10% of the Indian company in economic terms, yet none of them passes the majority-stake test. If they act together under an agreement, or one of them controls the board, the fourth limb can still reach them.

The exemptions, and one that is not there

Rule 8 takes shares out of the rules to the extent they are held by:

• the Investor Education and Protection Fund authority;
• a holding reporting company — an Indian company, whose own details are then reported in BEN-2;
• the central or a state government, a local authority, or a government-controlled entity;
• investment vehicles registered with SEBI (mutual funds, AIFs, REITs, InvITs) or regulated by the RBI, IRDAI or PFRDA.

A foreign parent is not a "holding reporting company", which means an Indian company. And there is no exemption for a parent listed on a foreign stock exchange. The listed-company carve-out that people have in mind comes from the bank KYC rules, covered below. Under the Companies Act, a listed parent changes the answer only because, being widely held, it rarely has an individual with a majority stake — and the company must still reach that conclusion properly, not assume it.

The four BEN forms

If the parent does not reply to BEN-4, or replies unsatisfactorily, the company must apply to the National Company Law Tribunal within 15 days after the reply period ends. The Tribunal can then restrict the shares — freezing transfers, dividends and voting. Where no application for relaxation is made within a year, the shares pass to the Investor Education and Protection Fund authority.

Two practical points for a foreign group. The obligation to identify sits with the Indian company, under Section 90(4A), so it cannot wait for the parent to volunteer information. And a change in the parent's ownership abroad — a founder selling down, a new investor — can create or end a significant beneficial owner without anything happening in India, so the BEN-4 exercise needs repeating whenever the group's cap table moves. It belongs on the subsidiary's annual compliance calendar as a standing item.

Not the same as the nominee declaration

A private company needs at least two shareholders, so a wholly-owned subsidiary often has a second holder with one share held for the parent. That arrangement is reported under Section 89, not Section 90:

• the registered holder declares in MGT-4,
• the parent, as beneficial owner of that share, declares in MGT-5,
• and the company files MGT-6 with the ROC within 30 days of receiving the declaration.

Both regimes can apply to the same company. Section 89 is about who owns a particular share; Section 90 is about which individuals sit at the top.

What non-compliance costs

The individual's penalty falls on a person who is usually abroad and may never have heard of Section 90, which is one reason the Indian company should explain the obligation in its BEN-4 rather than simply serve the notice.

Why the bank asks the same question under a different law

The authorised dealer (AD) bank that receives the parent's share capital, and every bank the subsidiary banks with, must identify the company's beneficial owners under the Prevention of Money-laundering Act (PMLA) — Rule 9(3) of the PML Rules and the RBI's Know Your Customer directions. The questions overlap; the tests do not.

The listed-entity carve-out is the rule people remember when they assume a listed foreign parent removes the Section 90 exercise. It does not; it relieves the bank's KYC, and even then only where the jurisdiction and exchange are on the notified list — confirm with the bank.

Rule 9(3) matters for a third reason. Since the 2026 amendment to Press Note 3, whether an investment counts as coming from a country sharing a land border with India turns on beneficial ownership determined under the same Rule 9(3) criteria. A parent with any shareholder, at any level, connected to China or another land-border country should work through Press Note 3 after the 2026 change before the capital goes in — the order of steps is in bringing in share capital and filing FC-GPR.

Getting it right once

1. Draw the chain to the top — every level from the Indian company to the individuals or the listed or fund entity at the top, with percentages and any agreements conferring control.
2. Serve BEN-4 on the parent, explaining what is asked and why, and diarise the 30 days.
3. Collect BEN-1 from each individual identified, and file BEN-2 within 30 days of receipt.
4. Enter the register in BEN-3, and keep the working that supports a conclusion that someone does not qualify.
5. Repeat on any change in the group's ownership — including a share transfer at the Indian level, where pricing and FC-TRS come with it.

The same structure chart, kept current, answers the ROC, the AD bank and a Press Note 3 review. Three versions of it, drawn at different times by different advisers, is how the answers start to disagree.

This note describes Section 90 and the Companies (Significant Beneficial Owners) Rules, 2018, as amended in 2019, and their interaction with the PML Rules, as at 23 September 2026. It is not advice on a particular group: whether an individual qualifies depends on the full chain of holdings, on agreements conferring control, and on the form of each entity in the chain — partnerships, trusts and funds carry rules of their own. The notified jurisdictions for the bank KYC carve-out, and the current Press Note 3 position, should be confirmed before relying on either.