With recent development to the Companies Act 2013, the Ministry of Corporate Affairs has amended the significant ownership rules for companies.
The alterations are incorporated to put in place a more reformed and unambiguous regulatory framework, thereby also facilitating entities having its headquarters outside the Country. The rules are clear, precise and "all forms of control" that could be exercised in the affairs of a company are being captured.
The amended rules besides clearly categorizing whether an individual or an entity has significant beneficial ownership, it also makes it essential for corporates to provide the Ministry with more elaborate details and information about the entity. Moreover, the amendment will be beneficial in eliminating the principle of proportional calculation and seek lifting of the corporate veil.
Based on the significant ownership rules now, a company shall be entitled to exercise its powers through various means, including voting, access to dividends and control over key management decisions.
The modifications are put in place to determine and eradicate illicit fund flows in the name of corporate entities and to identity and possess authority to govern entities controlled from elsewhere by either corporates or individuals who are not there in the radar.
Lately, the Ministry has deregistered lakhs of companies for not carrying out business activities for a long period of time.