FREQUENTLY ASKED QUESTION ON DESIGNATED PERSON TO NOTIFY BENEFICIAL INTEREST TO MCA IN THE ANNUAL RETURNS.

1.?? WHICH DATE? RESOLUTION TO BE MADE FOR DESIGNATED PERSON AND WHICH? E FORM? WITHIN HOW MANY DAYS TO BE FILLED?

·????? Board Resolution may be passed on the day where the accounts , directors report of the company approved.

·????? New E-Form MGT-7 or MGT-7A is to be still released by MCA with the provision to name the designated person.

·????? Details of the Designated person has to be filled in the new e-form MGT-7 or MGT-7A with 60 days of date of AGM or on or before ?29.11.2024

2.?? HAS ANYONE PREPARED ANY FORMAT FOR THE DESIGNATED PERSON FOR REPORTING UNDER MGT 7 AND 7A ?

NAME OF DESIGNATED PERSON

DESIGNATION

ADDRESS

BOARD RESOLUTION DATE WHICH AUTHORISED A DESIGNATED PERSON

3.?? WHERE IT IS NOTIFIED OR WHERE IS THE? d?????????????????? ????????????'S DISCLOSURE ???? ???????????? ???????????? ?

Companies would now be required to disclose the details of the designated person in the annual return filed with the Registrar of Companies (RoC).

MCA has to issue updated Annual Return form with the columns pertaining to Designated Persons

???? 4.WHERE TO MENTION IN MGT 7...PLEASE CLARIFY

As of date , no provision has been made in the form. You may attach an attachment to this effect

A designated person at the company level is expected to aid the Registrar of Companies or other MCA authorities as a single point of assistance in their inquiries on the beneficial interest of shares and ascertaining the actual owners of enterprises.

5.?? WHAT IS BENEFICIAL INTEREST IN SHARES?

Beneficial interest in shares refers to the ownership interest or rights associated with shares of a company held by an individual or entity, even if the legal title or ownership of those shares is registered in someone else’s name.

6.?? WHO CAN BE DESIGNATED PERSON?

MCA has now specified that a designated person could be a Company Secretary or a Key Managerial Personnel (other than a company secretary) or every director (in case there is no company secretary or KMP).

MCA’s deeming provision ensures that until a designated person is appointed, existing officers like Company Secretaries or Directors assume the role.

7.?? IS THIS APPLICABLE TO ALL COMPANIES EVEN IF SHAREHOLDERS ARE INDIVIDUAL?

Notification say that

“(4) Every company shall designate a person who shall be responsible for furnishing, and extending co-operation for providing, information to the Registrar or any other authorised officer with respect to beneficial interest in shares of the company"

The company must disclose the designated person's name in the annual return.

Since the provisions are applicable from 27th October, 2023, the disclosure should be applicable for the annual return filed for FY 23-24 and onwards.

8.?? DOES IT JUST APPLY FOR BENEFICIAL INTEREST AND NOT FOR SIGNIFICANT BENEFICIAL INTEREST?

Yes, It is applicable for both.

9.?? WHAT WILL THE REPORTING PERSON DO ?

Reporting Person will

? ???????????? ?????? ???????????????????? ???????????? in the ???????????? ???????????? (??????-?? ???? ??????-????).

? If there’s a ???????????? in the designated person during the year, file ??-???????? ??????-?? to notify the Registrar.

10. WHY BENEFICIAL INTEREST MATTERS

·????? Beneficial interest matters for several reasons, such as ownership and control, voting rights, taxation, beneficiary rights, and proxy voting.

·????? Beneficial interest helps establish who has the right to vote on company matters. Shareholders with beneficial interests may exercise these rights even if they aren’t the legal owners.

·????? It can impact tax liabilities, as different tax rules may apply to beneficial owners compared to legal owners. This is important for tax planning.

·????? Identifying the beneficial interest in shares is vital for governance, taxation, transparency, and protecting the rights of the ultimate owners of the shares

CONCLUSION

New E-Form MGT-7 or MGT-7A is to be still released by MCA with the provision to name the designated person. Companies are now very busy with the filing of Annual Return MGT-7 or MGT-7A.

It is a matter of concern that the MCA is still not released the new Annual Return MGT-7 or MGT-7A with the particulars of details of the designated person.

It is requested that the MCA should come forward immediately to release the new Annual Return MGT-7 or MGT-7A with the particulars of details of the designated person so that companies are adhering to the recent developments as regards to above.

R V Seckar , Practicing Company Secretary

79047 19295

[email protected]