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Control based SBO identification beyond the current legislation

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Critical analysis of a recent RoC’s Order u/s 90 of the CA, 2013

– Neha Malu, Deputy Associate | corplaw@vinodkothari.com

Background

The requirement of identification of Significant Beneficial Owners (“SBOs”) for companies in India kicked in with effect from 13th June, 2018[1]. It marks its origination based on the recommendations issued by the Financial Action Task Force (“FATF”). However, since its inception, neither the regulator nor the regulatees have been able to take a sigh of relief when it comes to implementing the directive for identifying an SBO for their company. There were several rounds of amendments[2], followed by extending the requirement to identify such SBO for LLPs[3] and thereafter introducing the concept of ‘designated persons’[4] for sharing the information of beneficial owners. Not only that, but to ensure companies do not miss their identification spree, the RoC has been sending advisory to several companies since the last year being 2023 seeking clarification on why they have not or whether they have identified the company’s SBO.

In the present article, the Author discusses the legal framework governing SBOs in the Indian parlance with a specific focus on the identification of SBOs who have or is said to have control  without any shareholding or voting rights in the light of the Adjudication Order[5] issued by the Registrar of Companies, NCT of Delhi and Haryana (“ROC”), in the matter of LinkedIn Technology (“Order”) and also delves into the discussion under the FATF guidance in this respect.

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AML/ CFT Compliances Expand – RBI Further Amends KYC Master Directions

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– Chirag Agarwal | Executive | finserve@vinodkothari.com

Introduction

The Reserve Bank of India (“RBI” or “Regulator”) plays a pivotal role in India meeting its anti-money laundering (AML) and combating financing of terrorism (CFT) obligations as part of its membership with the Financial Actions Task Force (FATF). As the Regulator of the credit sector and payment systems it does so by  ensuring the implementation of robust and up-to-date Know Your Customer (KYC) norms vide its  Master Direction – Know Your Customer (KYC) Direction, 2016 (“KYC Directions”). With a possible FATF evaluation around the corner, on October 17, 2023, the RBI introduced significant amendments to these KYC directives through its notification titled – Amendment to the Master Direction on KYC (“Amendment”), impacting various regulated entities, including Non-Banking Financial Companies (NBFCs).

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The Rise of Stablecoins amidst Instability

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-Megha Mittal

(mittal@vinodkothari.com) 

The past few years have witnessed an array of technological developments and innovations, especially in Fintech; and while the world focused on Bitcoins and other cryptos, a new entrant ‘Stablecoin’ slowly crept its way into the limelight. With the primary motive of shielding its users from the high volatility associated with cryptos, and promises of boosting cross-border payments and remittance, ‘Stablecoins’ emerged in 2018, and now have become the focal point of discussion of several international bodies including the Financial Standards Board (FSB), G20, Financial Action Task Force (FATF) and International Organization of Securities Commission (IOSCO).

Additionally, the widespread notion that the desperate need of cross-border payments and remittances during the ongoing COVID-crisis may prove to be a defining moment for stablecoins, has drawn all the more attention towards the need of establishing regulations and legal framework pertaining to Stablecoins.

In this article, we shall have an insight as to what Stablecoins, (Global Stable Coinss) are, its modality, its current status of acceptance by the international bodies, and how the ongoing COVID crisis, may act as a catalyst for its rise.

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