Disclosure requirement under amended section 90 of the Companies Act 2013, sets a deadline for all companies to disclose the names of individual to either directly or indirectly hold more than 10 percent stake in the entity or exercise significant influence or control over its affairs. It will no longer be possible to mask the ultimate beneficial ownership of the company. The new disclosure requirement under the companies significant beneficial owners rules 2018 which was notified on 13thjune, 2018 is aimed at bringing transparency in the manner in which shares of companies are being held. The Threshold limits for the disclosure of beneficial ownership of entity in the SBO rules is 10 percent of the shareholding vis-a-vis 25 in the section 90 of the Companies Act.
The company is also required to file a return giving details about the significant beneficial owners with the registrar of the companies. The return shall contain name, address and other details about these beneficial owners. It has been made mandatory for every individual holding beneficial interest of 10 percent or more in the shares of the company or exercising significant influences or control to make a declaration to the company. The penalty for failure to disclose is fine from 1 lakh to 10 lakh rupees.
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