The Ministry of Corporate Affairs (MCA) has recently notified amended rules that require companies to report beneficial ownership information. Here are the key details companies need to know.
MCA Notification dated 27/10/2023: Amendment Rules on Designated Person for Reporting Beneficial Ownership in Companies
Designated Person Required
Per the Companies (Management and Administration) Second Amendment Rules, 2023, all companies must now designate a person who will be responsible for providing information on beneficial ownership to the Registrar of Companies (RoC).
The company can choose to designate the company secretary, any key managerial personnel, or a director for this purpose. If no one is chosen, by default, it will be the company secretary, managing director/manager, or director who will serve as the designated person.
Details in Annual Return
The designated person’s details must be included in the company’s annual return. Any subsequent changes, like a new designated person, must be intimated to the ROC through Form GNL-2.
Improving Transparency
This amendment is aimed at enhancing transparency around beneficial ownership in companies. The designated person will serve as a point of contact for the regulatory authorities to obtain beneficial ownership information.
Beneficial ownership refers to identifying the natural persons who ultimately own, control, or benefit from a company. Requiring reporting of such information is considered important to prevent misuse of corporate structures for money laundering, tax evasion and other illegal activities.
Effective Date
The Companies (Management and Administration) Second Amendment Rules, 2023 come into effect on 27 October 2023. Companies should take note and ensure compliance. Designating a person responsible for liaising with ROC on beneficial ownership reporting on priority.
The amended rules are a positive step towards greater transparency and accountability in Indian companies. Responsible reporting of beneficial interests will also improve India’s compliance with global anti-money laundering standards.