India has issued the Companies (Significant Beneficial Owners) Rules, 2018, requiring companies and partnerships in the country to maintain an official record of persons holding beneficial shares.

Companies must also file a return with the Registrar of Companies providing details about their significant beneficial owners (SBOs).

SBO definition

India’s definition of an SBO is any person who is not a registered shareholder of the company but who either individually or jointly owns not less than 10 per cent of the share capital of the company or directly or indirectly exercises significant influence or control over the company.

In a partnership, an SBO is identified as the person or beneficiaries with rights to at least 10 per cent interest in the entitlement to profits of a limited liability partnership (LLP).

The SBO Rules are not applicable to companies or corporations regulated by the Securities and Exchange Board of India or pooled investment funds or entities, such as mutual funds or real estate investment trusts.

Stringent rules

India’s reporting requirements are similar to those in other countries that require most commercial entities to produce, keep, and maintain a register of any persons or relevant legal entities that have significant control over that company or LLP.

India’s requirements however are more stringent than in some countries because the threshold for SBO holders is set at 10 per cent of a member’s holding in the company or LLP, as opposed to 25 per cent threshold applied in many other countries.

India’s SBO Rules can be found here.