Five Percent Shareholders explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A single date decides the whole disclosure. Holdings that peaked mid-year and fell away are outside it, and holdings acquired days before year end are inside.
The requirement
Clause (g) of Note 6(D)(I): shares in the company held by each shareholder holding more than 5 per cent shares, specifying the number of shares held.
Note that the threshold is more than 5 per cent — a holder at exactly 5 per cent falls outside it.
Schedule III does not say on what date the percentage is measured. The guidance note fills the gap: in the absence of any specific indication of the date of holding, the date for computing such percentage should be taken as the balance sheet date.
And it spells out the result: if during the year any shareholder held more than 5% equity shares but does not hold as much at the balance sheet date, disclosure is not required.
That is a point-in-time test, and it is worth contrasting with the promoter shareholding disclosure added by the 24 March 2021 amendment, which requires the percentage of change during the year. The two disclosures answer different questions — one is a snapshot of concentration at the reporting date, the other is a measure of movement.
A company reporting both will sometimes show a promoter whose shareholding changed materially during the year but who appears in the 5% table only at its closing level, or not at all.
Five percent shareholders: per class, and per instrument
Though it is not specified as to whether the disclosure is required for each class of shares or not, companies should disclose the shareholding for each type of equity instrument. Accordingly, the percentage should be computed separately for each class of shares outstanding within equity shares.
This matters where a company has ordinary shares and shares with differential voting rights. A holder may be above the threshold in one class and below it in another, and a combined computation would obscure both facts.
The disclosure also extends to instruments entirely equity in nature, to the extent applicable — so a class of compulsorily convertible preference shares treated as equity carries its own 5% computation.
The comparative
This information should also be given for the comparative previous period. Reading the two years together is what makes the point-in-time test workable — a reader can see who entered and who left the list, even though the disclosure itself does not track movement.
What the five percent shareholders table contains
- the name of each shareholder above the threshold;
- the number of shares held; and
- in practice, the percentage held, since that is the basis on which the shareholder was identified.
Common mistakes
- Listing as five percent shareholders those who crossed the threshold at any point during the year.
- Computing the percentage across all classes combined.
- Omitting the comparative period table.
- Applying the disclosure to equity shares only where other equity instruments exist.