Identifying the SBOs: Why lifting corporate veil may not be easy

According to experts, there could be implementation challenges in the identification of an SBO, defining 'indirect shareholding' of an individual, and identifying 'majority stake'

The Companies (Amendment) Bill, 2019, has cast specific responsibility on companies to identify significant beneficial owners (SBOs) as part of measures to strengthen the governance framework for businesses. 

While this is not a new provision — a similar provision was included by the amendment to the SBO Rules in February 2019 — earlier there were no corresponding penalty provisions for non-compliance. Also, the latest amendment puts the onus on the company to take “necessary steps” to identify an SBO. 

 “The object is very clear that an individual needs to be identified who is the significant beneficial owner of the company. The companies