Significant beneficial owner (SBO): meaning, threshold and forms
A significant beneficial owner is an individual who ultimately holds 10% or more of a company's shares, votes or dividends, or controls it.
Short answer
A significant beneficial owner (SBO) is an individual who, alone or with others, ultimately holds at least 10% of a company's shares, voting rights or dividend rights, or exercises significant influence or control over it, through indirect holdings. Under section 90 of the Companies Act, 2013, SBOs must declare their interest and the company must report it to the ROC.
- Governed by
- Section 90 and the SBO Rules, 2018
- Threshold
- 10% of shares, votes or distributions, or control
- Declaration by SBO
- Form BEN-1
- Company filing
- Form BEN-2 within 30 days
How the SBO test works
The test looks through companies, LLPs, trusts and other entities to find the natural person at the top of the chain. An individual becomes an SBO if they hold an indirect stake, or a combination of direct and indirect stakes, that reaches 10%, or if they exercise significant influence or control in any manner other than through direct holdings alone. A person holding only direct shares is reported as a member, not an SBO.
Filings and registers
Each SBO must give the company a declaration in Form BEN-1. The company must file Form BEN-2 with the ROC within 30 days of receiving it and record the details in the register of significant beneficial owners in Form BEN-3. Companies must also take steps to identify SBOs, including sending notices in Form BEN-4 to members who are not individuals and may hold on behalf of others. Failure to declare or report attracts penalties on the individual and the company.
Why it matters for startups
Startups with a corporate investor, a family trust or a founder holding company as shareholder need to trace the individuals behind those entities. Banks and payment partners ask for beneficial ownership under KYC rules, and foreign investment from countries sharing a land border with India is assessed by looking at the beneficial owner. Keep the BEN-3 register current after every round.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Is every 10% shareholder an SBO?
No. A person holding 10% directly is a member. SBO status arises from indirect holdings or control exercised through other entities.
What if an SBO refuses to declare?
The company can send a BEN-4 notice and, if needed, apply to the tribunal to restrict the rights attached to the shares.
Do LLPs have SBO rules?
Yes. Similar beneficial ownership rules apply to LLPs under the LLP rules, with their own forms.