Ministry Of Corporate Affairs has put stern rules against Significant Beneficial Owners linked to Indian Corporate Companies. They might face stern actions if there are adequate or wrong disclosure about their ownership as such action will be considered fraud under the Companies Act.
A Significant Beneficial Owner is a person whose name is not in the records of a company, but has significant ownership in the company and control the management and daily affairs of the company. The companies too can seek action from the Significant Beneficial Owners in case they do not provide satisfied responses and if companies fail to maintain details on registers of Significant Beneficial Owners, then companies would face actions from MCA.
MCA in a drive to identify Benami transactions and prevent money laundering activities are trying to track all the Significant Beneficial Owners and obtain a declaration from them about their percentage of the ownership in companies.
According to rules, a Significant Beneficial Owners under Section 90 of the Companies Act, 2013, is an individual who holds less than 10 percent of beneficial interest in a company and who can either hold it alone or together or with one or more person, and an additional clause under Rules says the individual who holds beneficial interest s
Corporate companies require to be more transparent about their Significant Beneficial Owners and need to provide elaborate details to the Ministry Of Corporate Affairs. The amendment of this rule by MCA will help the government bring more clarity and accountability in corporate companies and make the shareholding structure crystal clear.
Significant Beneficial Owner needs to declare their shareholdings in a company and if they fail to declare or willfully provide wrong information they would face fines, imprisonment or both under the Companies Act 2013. In situations where a Significant Beneficial Owner does not provide a satisfactory response or does not respond then the company can approach the National Law Tribunal (NCLT) for proper directions.
At a point where Ministry of Corporate affairs is breaking down on shell companies and disqualifying directors who do not follow mandates and trying to tackle illicit funds flow, this initiative will help them track down on funds under dummy directors or individuals.
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