India amends significant beneficial owners rules under companies law

NEW DELHI: The government of India has amended the significant beneficial ownership rules for companies, putting in place a more clear regulatory framework that would also help identify entities that might be controlled from outside the country, according to an official.nnThe corporate affairs ministry has issued amendments to the significant beneficial owners rules under the Companies Act, 2013.nnApart from providing more clear definitions for determining whether an individual or an entity has significant beneficial ownership, corporates will be required to provide the details in a more elaborate manner to the ministry.nnFor the first time, the ministry issued the rules pertaining to significant beneficial owners in June 2018.nnThe official said the amended rules are clear, precise and “all forms of control” that could be exercised in the affairs of a company are being captured.nn”The whole principle of proportional calculation has been done away with. It is very clear on how significant beneficial owners would be identified in various circumstances… The rules seek to lift the corporate veil,” the official added.nnSignificant influence in a company could be exercised through various means, including through voting, access to dividends and control over key management decisions.nnThe changes to the rules also come at a time when the government is continuing with efforts to clamp down on corporate entities suspected to be used as conduits for illicit fund flows. The ministry, which is implementing the companies law, has already deregistered lakhs of companies that have not been carrying out business activities for a long time.nnThe official also said the changes made to the rules are also part of an effort to crackdown on those companies that are controlled from elsewhere by either corporates or individuals who are not there in the radar.nn”If there are companies that are controlled from across the shores, then we would like to identify them. Within the country also, every company is duty bound to identify their significant beneficial owners,” the official added.nnSource: Press Trust of India