The recent changes to Section 90 of the Companies Act, 2013, pertaining to Beneficial Owners, is to determine the identity of the person behind the curtain having a significant ownership of the company and is essentially controlling the management and daily affairs of the company; with a view to promote corporate transparency and prevent misuse of corporate vehicles for illicit purposes such as corruption, tax evasion and money laundering.
With this intention, the Ministry of Corporate Affairs (MCA) had notified the Companies (Significant Beneficial Owners) Rules, 2018 on 13 June, 2018. However, the 2018 Rules were not clear in many aspects and the stakeholders were clueless as to how to determine the SBOs with no clear answers to many questions they had.
MCA took a note of the various concerns raised by the stakeholders and on 8 February 2019, it came out with an amended set of Rules to replace the earlier Rules. The amended Rules are known as the Companies (Significant Beneficial Owners) Amendment Rules, 2019.