Corporate Transparency and SBO: RoC Cracks Down on Tech Executives

The Registrar of Companies (RoC) has recently issued significant adjudication orders penalizing high-ranking executives of prominent technology firms for non-compliance with 'Significant Beneficial Ownership' (SBO) norms. This action, taken under the Companies Act, 2013, underscores the government's commitment to piercing the corporate veil and identifying the actual individuals who exercise ultimate control over corporate entities. Under Section 90 of the Companies Act, an SBO is defined as an individual who, acting alone or together with others, possesses not less than 10% of shares or voting rights, or exercises 'significant influence' or 'control' over a company. The recent penalties emphasize that 'influence' is a qualitative measure. Even if an executive or a parent entity does not hold a direct majority of shares, their ability to direct policy, appoint directors, or manage key decisions necessitates disclosure. This is particularly relevant for global tech giants where ownership is often layered through complex holding structures across multiple jurisdictions.