‘Cos may face ac­tion for wrong de­tails’

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - —PTI

New Delhi: Sig­nif­i­cant ben­e­fi­cial own­ers in In­dian cor­po­rates might face strict ac­tion for in­ad­e­quate or wrong dis­clo­sures about their own­er­ship and com­pa­nies too can seek ac­tion against en­ti­ties in case they fail to pro­vide sat­is­fac­tory re­sponses, ac­cord­ing to rules.

With the cor­po­rate af­fairs min­istry amend­ing the rules for sig­nif­i­cant ben­e­fi­cial own­ers un­der the Com­pa­nies Act, 2013, cor­po­rates are re­quired to take nec­es­sary steps to iden­tify such own­ers and ob­tain a dec­la­ra­tion from them.

Apart from pro­vid­ing more clearer definitions for de­ter­min­ing whether an in­di­vid­ual or an en­tity has sig­nif­i­cant ben­e­fi­cial own­er­ship, cor­po­rates would be re­quired to pro­vide the de­tails in a more elab­o­rate man­ner to the min­istry.

Sig­nif­i­cant ben­e­fi­cial own­ers, who fail to make a dec­la­ra­tion re­gard­ing their own­er­ship, could face fine, im­pris­on­ment or both un­der the Com­pa­nies Act. In in­stances, where such en­ti­ties have will­fully pro­vided in­cor­rect in­for­ma­tion, then such acts would be con­sid­ered as fraud un­der the Act.

Sim­i­larly, com­pa­nies that fail to main­tain reg­is­ters of sig­nif­i­cant ben­e­fi­cial own­ers would also face ac­tion, as per the rules.

Lead­ing con­sul­tancy Deloitte said the spirit of the amend­ment rules is to bring in more clar­ity and is in align­ment with the govern­ment’s drive to in­cul­cate trans­parency and ac­count­abil­ity in the cor­po­rate set up.

“The dis­clo­sures re­lat­ing to Sig­nif­i­cant Ben­e­fi­cial Own­ers are ex­pected to lead to trans­parency of share­hold­ing struc­tures and help the govern­ment iden­tify be­nami trans­ac­tions and pre­vent money laun­der­ing ac­tiv­i­ties,” it said in a note.

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