Rules 7 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.
Rules 7 and 8 close the Significant Beneficial Owners Rules. Rule 7 says what a reporting company does when a member will not, or does not satisfactorily, answer a BEN-4 notice: it applies to the Tribunal for an order putting restrictions on the shares. Rule 8 lists the holdings to which the rules do not apply at all. This article states them as amended up to G.S.R. 404(E) dated 15 July 2024 per the MCA e-book; later amendments should be checked. Both rules were substituted by the Amendment Rules of 8 February 2019; the earlier wording, including the discretionary "may apply" in rule 7, is not the rule today.
A reporting company shall apply to the Tribunal under section 90(7) where a person fails to give the information sought in BEN-4 within the time specified, or the information given is not satisfactory. The order may restrict transfer, suspend the right to dividend or any other distribution, suspend voting rights or impose any other restriction on the shares. The rules do not apply to the extent shares are held by the listed holders, such as Government bodies, SEBI-registered investment vehicles and the company's holding reporting company. See section 90, and our legal consultation service for an application.
Rule 7: application to the Tribunal
The reporting company shall apply to the Tribunal:
- (i) where any person fails to give the information required by the notice in Form BEN-4 within the time specified in it; or
- (ii) where the information given is not satisfactory,
in accordance with section 90(7), for an order directing that the shares in question be subject to restrictions, including:
| Clause | Restriction the Tribunal may be asked to order |
|---|---|
| (a) | Restrictions on the transfer of interest attached to the shares in question. |
| (b) | Suspension of the right to receive dividend or any other distribution in relation to the shares. |
| (c) | Suspension of voting rights in relation to the shares. |
| (d) | Any other restriction on all or any of the rights attached with the shares. |
Three points matter for companies. First, the 2019 text uses "shall": once a person fails to respond, or the answer is not satisfactory, the application is a duty and not an option. Second, the rule prints no time limit for the application and no form for it; the time for the BEN-4 reply is "the time specified therein", that is, in the notice the company itself sends. Third, "not satisfactory" is not defined in the rule, so the company should record why it regards an answer as unsatisfactory before applying. The notice is in Form BEN-4, covered in our article on rules 2A to 6.
The earlier rule, which the e-book records as replaced, read "may apply" and listed the suspension of "the right to receive dividend" without the words "or any other distribution". That wording is history.
Rule 8: non-applicability
The rules shall not apply to the extent the shares of the reporting company are held by:
| Clause | Holder |
|---|---|
| (a) | The authority constituted under section 125(5) of the Act. |
| (b) | Its holding reporting company, with a proviso that the details of such holding reporting company are reported in Form BEN-2. |
| (c) | The Central Government, a State Government or any local authority. |
| (d) | (i) a reporting company, (ii) a body corporate or (iii) an entity controlled by the Central Government or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments. |
| (e) | SEBI-registered investment vehicles such as mutual funds, alternative investment funds (AIFs), Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) regulated by the Securities and Exchange Board of India. |
| (f) | Investment vehicles regulated by the Reserve Bank of India, the Insurance Regulatory and Development Authority of India or the Pension Fund Regulatory and Development Authority. |
Three features of the list. The exemption is "to the extent" of the shares held by that holder, so a reporting company still looks at its other members. The holding company exemption comes with a reporting duty: the holding reporting company's details go into BEN-2. And the earlier rule 8 was narrower, exempting only pooled investment vehicles and funds such as mutual funds, AIFs, REITs and InvITs; the present clauses (a) to (f) are the rule now.
The Annexures
The Annexure lists four forms: BEN-1 (declaration), BEN-2 (return), BEN-3 (register) and BEN-4 (notice). BEN-1 is the declaration, BEN-2 the return, BEN-3 the register and BEN-4 the notice. BEN-2 was substituted in 2019 and in 2024; the 2024 notification is a form change.
Example
Crest Pharma Limited sends a BEN-4 notice to Corporate Investor Private Limited, a member holding a substantial stake, asking for details of the individuals behind it by a date it specifies. No reply comes by that date. Under rule 7(i) the company applies to the Tribunal, under section 90(7), for an order restricting the shares, which may include a bar on transfer, suspension of dividend and other distributions, and suspension of voting rights. Separately, Crest's shares held by a SEBI-registered mutual fund are outside the rules by rule 8(e), and its holding reporting company's shares are outside them too, with that company's details reported in BEN-2.
Need help with a Tribunal application?
Applying under section 90(7) needs a clear record of the BEN-4 notice, the time given and the reply received. For help with the papers and the application, see our legal consultation service.
Key takeaways
- A reporting company shall apply to the Tribunal if BEN-4 information is not given in time or is not satisfactory.
- The order may restrict transfer, suspend dividend and other distributions, suspend voting rights or impose other restrictions.
- The rules do not apply to the extent shares are held by the holders in rule 8(a) to (f).
- A holding reporting company is exempt, but its details go in BEN-2.
- BEN-1, BEN-2, BEN-3 and BEN-4 are the annexed forms.
Read next
- Rules 1 and 2: who is a significant beneficial owner
- Rules 2A to 6: BEN-1, BEN-2, the register and BEN-4
- Section 90: significant beneficial owners
- Significant beneficial ownership: BEN-1 and BEN-2 filing
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.