Corporate Law Notification & Order Corporate Law

MGT-7 SBO Companion Walk-Through for FY 2025-26 Annual Returns: Part-A Disclosure, V3 Register Reconciliation, BEN-2 Timeline, and the Section 90(11) Rs 10 Lakh Discipline

admin

Quick Summary: MGT-7 SBO Disclosure for FY 2025-26

  • What changed: the V3 portal SBO Electronic Register mandate effective April 1, 2026 (covered in Post 718) feeds directly into the FY 2025-26 MGT-7 annual return SBO disclosure tick-box. Practitioners must now reconcile the year-round BEN-2 filings with the snapshot picture in MGT-7 Part-A.
  • When MGT-7 is due: within 60 days of the AGM date under Section 92(4) of the Companies Act 2013. For most companies this lands between mid-November and end-November 2026.
  • Penalty exposure if disclosure is wrong or absent: Section 90(11) of the Companies Act 2013 carries a penalty of up to Rs 10 lakh on the company plus continuing default exposure on the company and on every officer in default.
  • The reconciliation problem: the SBO position on the AGM date in MGT-7 should match the cumulative state of the V3 SBO register on that date. Mid-year BEN-2 filings, BEN-1 declarations received but not yet acted on, and Section 90(5) notices issued during the year all feed into the MGT-7 snapshot.
  • Top three errors to avoid: (1) treating MGT-7 SBO as a paste of last year’s data, (2) missing reportable indirect-holding chains, and (3) failing to attach the V3 SBO register extract as a Part-A schedule.

Why MGT-7 needs a fresh walk-through this year

Until FY 2024-25, the MGT-7 SBO disclosure was a relatively static tick-box: list significant beneficial owners as on the financial year close, report any change-of-status BEN-2 filings, and attach a one-page extract from the SBO register kept in physical form. From April 1, 2026 the rules have tightened on three fronts, all covered in our recent advisory Post 718: SBO Electronic Register on V3 Portal Effective April 1, 2026.

First, the SBO register now lives on the V3 portal as an electronic register that is updated through the year. Second, BEN-2 filings carry a 30-day cadence under the V3 rules with a Rs 10 lakh penalty exposure under Section 90(11). Third, the MGT-7 Part-A SBO disclosure is no longer a stand-alone snapshot; it is now a reconciliation of the V3 register state on the AGM date with the cumulative BEN-2 filings made through the year. A practitioner who walked through MGT-7 mechanically in prior years will find the FY 2025-26 form materially different.

This article is the operational walk-through for the FY 2025-26 MGT-7 SBO disclosure. The reader is a Company Secretary or a CS-tracked CA preparing the annual return for the AGM cycle that begins in late September 2026 and concludes on the company’s MGT-7 due date in November 2026.

The MGT-7 Part-A SBO disclosure: where in the form

The MGT-7 form for FY 2025-26 retains the structure under Section 92(3) of the Companies Act 2013 read with Rule 11 of the Companies (Management and Administration) Rules 2014. The SBO disclosure sits in Part-A under the shareholding pattern section, immediately after the holding company / subsidiary details and before the indebtedness section. The fields are:

  • SBO Disclosure Tick-Box (Yes / No): does the company have any registered Significant Beneficial Owner under Section 90 read with the SBO Rules 2018 as on the date of the AGM.
  • If Yes – SBO Schedule: a structured schedule capturing the SBO’s name, PAN, percentage of indirect holding, the holding chain through which the SBO indirectly holds, the date on which BEN-2 was filed (or the date the SBO Disclosure was first received under BEN-1), and any change-of-status BEN-2 filings during the year.
  • Attachment: a certified true copy extract from the V3 SBO Electronic Register reflecting the position as on the AGM date.
  • If No – Reason Selector: the company has done due diligence under Section 90(5) and identified no reportable SBO; or the company is not subject to SBO Rules under Rule 8 of the SBO Rules 2018.

Step 1: Reconcile the V3 SBO register state on the AGM date

The first task is to pull the V3 SBO Electronic Register state on the AGM date. Under the V3 portal mandate, the register is automatically updated when:

  1. BEN-1 declarations are received from a person who knows or has reason to believe they are an SBO under Section 90(1).
  2. BEN-2 filings are made by the company within 30 days of receipt of BEN-1 or determination of SBO status.
  3. Section 90(5) notices are issued by the company to identified persons.
  4. Section 90(7) replies are received and uploaded.
  5. Section 90(9) tribunal applications, if any, are filed.

Practical step: log into V3 with the company’s Authorised Signatory DSC, navigate to MCA Services -> Section 90 SBO Register -> View / Download Register, select the date range FY 2025-26, and download the certified true copy as a PDF. This becomes the working file for the MGT-7 schedule.

Step 2: Build the BEN-2 timeline for FY 2025-26

The BEN-2 timeline gives you the year-round movement that MGT-7 captures as a snapshot. Pull every BEN-2 filing made by the company in FY 2025-26 from the V3 portal under MCA Services -> Forms -> BEN-2 -> Filing History.

Trigger event BEN-2 filing date SBO Name Holding % Holding chain depth
BEN-1 received from SBO Within 30 days of receipt Per declaration 10% or above (direct + indirect) Per declaration
BEN-3 change of status (new SBO added or removed) Within 30 days of change Updated Updated Updated
Reportable change in holding % Within 30 days of the change Same Updated Same
Termination of SBO status Within 30 days Removed 0 Same

For each BEN-2 filing in FY 2025-26, capture the trigger event (initial filing, change-of-status, holding % change, termination), the filing date, and the SRN. This timeline is your audit trail behind the MGT-7 schedule.

Step 3: Identify the indirect holding chains

The reportable Significant Beneficial Owner is the natural person who, alone or together, indirectly holds at least 10% of the shares, voting rights, distribution rights, or who exercises significant influence or control as defined under Rule 2(1)(h) of the SBO Rules 2018. The chain analysis is where most errors creep in.

Common chain patterns to map:

  • Foreign holding company chain: Indian Co held by a Mauritius / Singapore SPV held by a Cayman holding company held by a natural person trustee. Map every layer; reportable SBO is the natural person at the end.
  • Family trust chain: Indian Co held by a private trust where natural-person beneficiaries have a 10% or more economic interest. Reportable SBO is the natural-person beneficiary.
  • Partnership chain: Indian Co held by an LLP held by partners. Reportable SBO is each partner with 10% or more cumulative indirect holding.
  • Shareholders’ agreement override chain: a person who exercises significant influence or control under a shareholders’ agreement, even if the legal shareholding is below 10%. Reportable under the “control” limb of Rule 2(1)(h).

Practical step: for each major shareholder of the Indian Co, map the chain to the natural person. If at any layer there is a corporate holder with multiple shareholders, decompose the holding pro-rata to the natural-person end. Anyone with a cumulative 10% or higher indirect holding is reportable.

Step 4: Cross-walk to PAS-6 and Form CSL-1 (if applicable)

For companies with dematerialised securities, the Form PAS-6 reconciliation of share capital filed half-yearly under Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules 2014 should agree with the underlying shareholding numbers used in the MGT-7 SBO chain analysis. Numbers that do not tie are an audit flag.

Step 5: Prepare the Part-A SBO schedule

The Part-A SBO schedule under MGT-7 is a structured table. The fields are:

Field Source Note
Name of SBO BEN-1 / BEN-2 As declared.
PAN BEN-1 / BEN-2 For NRI / foreign SBO without PAN, capture passport number and country of issue.
Indirect holding % Chain analysis Cumulative across all chain layers.
Holding chain summary Chain analysis worksheet One-line description of the chain through each intermediate layer.
Date of first BEN-2 filing BEN-2 filing history Initial filing only.
Latest BEN-2 SRN BEN-2 filing history Most recent change-of-status filing in FY 2025-26.
Status as on AGM date V3 SBO register Active / Terminated / Under verification.

Step 6: Attach the V3 SBO register extract

The certified true copy extract from the V3 SBO Electronic Register on the AGM date is the supporting attachment for the MGT-7 SBO schedule. Save it as a single PDF, name it “SBO Register Extract YYYY-MM-DD.pdf” using the AGM date, ensure file size is under 6 MB, and ensure the PDF is searchable (OCR-enabled). Attach to the MGT-7 form along with the standard List of Shareholders attachment.

Step 7: Sign and file MGT-7 within 60 days of the AGM

The MGT-7 form must be signed by a Director and certified by a Company Secretary (or a Practising Company Secretary if no in-house CS). For OPC and Small Companies, MGT-7A applies with a streamlined SBO disclosure. The 60-day clock under Section 92(4) runs from the AGM date. Late filing carries an additional fee under Section 403 of the Companies Act 2013.

Penalty discipline: Section 90(11)

Under Section 90(11) of the Companies Act 2013, a company that fails to maintain the SBO register or fails to file the prescribed information is liable to a penalty of Rs 10 lakh, plus a penalty of Rs 1,000 per day for each day during which the default continues, subject to a cap of Rs 2 lakh. The same provision extends to every officer in default. The MGT-7 SBO disclosure is the year-end consolidation of this register; an inaccurate or absent disclosure expands the Section 90(11) exposure into the MGT-7 cycle.

The five errors that most commonly trigger Section 90(11) exposure

  1. Pasting last year’s SBO schedule into MGT-7 without a fresh chain analysis. The natural-person end may have changed. A holding company restructuring during the year may have introduced or removed a 10%-plus indirect holding.
  2. Missing the “control” limb of Rule 2(1)(h). A person who exercises control through a shareholders’ agreement is reportable even with sub-10% legal shareholding.
  3. Treating Section 90(5) notices as optional. If the company has reason to believe a person is an SBO who has not filed BEN-1, the company must issue a Section 90(5) notice. Failure to issue is itself a default.
  4. Filing BEN-2 outside the 30-day window without paying additional fee. The 30-day cadence is strict under the V3 portal mandate effective April 1, 2026. Late BEN-2 filings flow into the MGT-7 schedule and remain visible to the RoC officer.
  5. Not attaching the V3 SBO register extract to MGT-7. The annexure is not optional under the FY 2025-26 form schema; the absence of the extract is a self-evident defect.

The 9-step compliance checklist for MGT-7 SBO disclosure

  1. Pull the V3 SBO register extract on the AGM date.
  2. Build the BEN-2 timeline for FY 2025-26 (every filing, every trigger).
  3. Map indirect holding chains to the natural-person end for each shareholder.
  4. Cross-walk to PAS-6 (if dematerialised securities).
  5. Prepare the Part-A SBO schedule using the field-source table above.
  6. Validate all PANs (or passport numbers for foreign SBOs).
  7. Save the V3 SBO register extract as a searchable PDF under 6 MB.
  8. Run a peer review of the schedule with an in-house CS or external Practising Company Secretary before signing.
  9. File MGT-7 within 60 days of the AGM date with the SBO register extract attached.

How this connects to other recent advisories

Frequently Asked Questions

Q1: Does MGT-7A also require the SBO disclosure?

Yes. MGT-7A applies to OPCs and Small Companies and includes a streamlined SBO tick-box and abbreviated schedule. The reconciliation discipline with the V3 SBO register is the same; only the form structure is leaner.

Q2: What if the company is exempt from the SBO Rules under Rule 8?

Rule 8 of the SBO Rules 2018 carves out specified entities (the Authority, the holding reporting company, IEPF Authority, etc.). For these entities, MGT-7 Part-A SBO Tick-Box is “No” with the reason selector indicating Rule 8 exemption. No schedule and no attachment are required, but the basis for the exemption should be retained as an internal compliance note.

Q3: How is the AGM date treated for SBO snapshot purposes?

The MGT-7 Part-A SBO schedule reflects the V3 SBO register state as on the date of the AGM. If a BEN-2 filing was made between the financial year close (March 31, 2026) and the AGM date, the post-March 31 filing is reflected in the AGM-date snapshot. The cut-off is the AGM date, not the financial year close.

Q4: What if the V3 portal is congested during the MGT-7 filing window?

Most companies file MGT-7 between October and end-November. The V3 portal historically experiences congestion in the last two weeks of November. Plan to draft and validate the form by mid-November, sign by November 20, and upload by November 25 with a buffer for retries.

Q5: Is the BEN-1 declaration mandatory if the SBO has already filed BEN-2 in a prior year?

BEN-1 is the SBO’s self-declaration that triggers the company’s BEN-2 filing. Once filed, BEN-1 does not need to be re-filed unless there is a change of status. The MGT-7 schedule references the latest BEN-2 SRN; the historical BEN-1 sits in the V3 SBO register as the underlying source document.

Q6: Does the 10% threshold apply to direct or indirect holdings?

The 10% threshold under Rule 2(1)(h) applies to indirect holdings of shares, voting rights, distribution rights, or significant influence / control. A person with a 10% or higher direct holding is reported in the standard List of Shareholders, not as an SBO. The SBO disclosure focuses on the natural-person end of an indirect chain.

Q7: Are foreign nationals reportable as SBOs?

Yes. The SBO Rules 2018 do not restrict reporting to Indian nationals. A foreign natural person at the end of an indirect chain with 10% or higher cumulative indirect holding is reportable. Capture the passport number and country of issue where PAN is unavailable.

Practitioner takeaway

The FY 2025-26 MGT-7 SBO disclosure is no longer a year-end paste of last year’s schedule. It is a reconciliation of the V3 SBO Electronic Register state on the AGM date with the year-round BEN-2 filings made through the year. Treat MGT-7 SBO as a closing audit of the V3 register, not as an isolated form field. Pull the V3 register extract early, build the BEN-2 timeline by trigger, re-map every indirect holding chain, and attach the V3 register extract as an annexure. The Section 90(11) penalty exposure of Rs 10 lakh on the company is the floor; the operational cost of an inaccurate disclosure cascades into RoC scrutiny, future MGT-7 filings, and the company’s standing on the V3 portal.

Get the SBO disclosure right the first time

SBO chain analysis is the kind of compliance work where one missed indirect-holding layer carries Rs 10 lakh of penalty exposure. If you would like a peer review of your FY 2025-26 SBO chain analysis or a portfolio-level sweep of MGT-7 readiness, schedule a quick call here: https://calendly.com/asbanka-info/30min. Tax Update India works with Company Secretaries, in-house compliance teams, and CA portfolios on the operational mechanics of Section 90 SBO disclosure.

Disclaimer: This article is for general information and is not a substitute for legal or professional advice. The MGT-7 form schema, the V3 SBO Electronic Register flow, and the BEN-2 cadence may evolve. Verify the current MCA21 V3 portal documentation, the SBO Rules 2018 (as amended), and Section 90 of the Companies Act 2013 before relying on the procedural detail. Tax Update India does not assume responsibility for any decision taken on the basis of this article.

Stay compliant. Subscribe for weekly updates.

Get tax deadline reminders, regulatory changes, and compliance insights from Tax Update India. Trusted by 100+ startup founders.

Invalid email address
TaxUpdate.in - No spam, unsubscribe anytime.