Lower threshold for 'beneficial owners'; new rules take effect from June 30

An entity or an individual holding at least 10 per cent in a company will now be considered a significant beneficial owner

To identify the effective owner of a corporate entity, the ministry of corporate affairs has notified rules on ‘beneficial owners’. 

This provision had, in a different form, been part of the Companies Act, 1956, under section 180(7)(3). The new avatar comes under Section 90 of the Companies Act, 2013, as amended in 2017. The rules take effect from this Saturday.

Earlier, an entity or an individual holding at least 25 per cent stake in a company, either alone or with related parties, was considered a significant beneficial owner. This threshold has been reduced to 10 per cent. 

Those not qualifying