India is yet to hit its stride in dealing with Significant
Beneficial Owner (SBO) rules introduced by the
Companies (Amendment) Act, 2017. The SBO rules have its origin in
the recommendations made by the Financial Action Task Force
(FATF) to its member countries, to make suitable
changes in the national legislation to find out individuals, who
ultimately own significant beneficial shareholding in the reporting
company. There remains a large degree of uncertainty and confusion
around the new norms, and their practical impact, as explored
below.
Sections 89(10) and 90 of the Companies Act, 2013
(Act) were introduced on the recommendations of
the Company Law Committee (CLC) in its Report
dated February 1, 2016. The CLC noted that complex structures and
chains of corporate vehicles are used to hide the real owners
behind the transactions made using those structures.
