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MCA Fines Satya Nadella, LinkedIn India and 8 Executives for Violating SBO Norms

Last updated: 24 May 2024

The Corporate Affairs Ministry on Wednesday imposed fines on Microsoft-owned LinkedIn India, its top executives including CEO Satya Nadella, and eight other individuals. The penalties, totaling Rs 27,10,800, were levied for breaches of the Significant Beneficial Owner (SBO) norms under the Companies Act, 2013.

Background and Details of the Order

Satya Nadella, the CEO of Microsoft, which acquired LinkedIn in December 2016, alongside LinkedIn's current global CEO Ryan Roslansky, were found to be the significant beneficial owners of LinkedIn India. According to a 63-page order by the Registrar of Companies (RoC) for the NCT of Delhi & Haryana, the duo failed to report their SBO status as mandated under Section 90(1) of the Companies Act.

MCA Fines Satya Nadella, LinkedIn India and 8 Executives for Violating SBO Norms

The RoC highlighted that LinkedIn India and its executives neglected their duty to identify and disclose the SBO details, a requirement under Section 90 of the Act. This section necessitates companies to transparently declare the individuals who hold significant beneficial ownership.

Specific Penalties Imposed

For violating SBO norms, LinkedIn India received a penalty of Rs 7 lakh. Satya Nadella and Ryan Roslansky were each fined Rs 2 lakh. The other individuals penalized include Keith Ranger Dolliver, Benjamin Owen Orndorff, Michelle Katty Leung, Lisa Emiko Sato, Ashutosh Gupta, Mark Leonard Nadres Legaspi, and Henry Chining Fong, each facing fines for their roles.

The RoC order stated, "...Satya Nadella and Ryan Roslansky are the SBOs in relation to the subject company and are liable to a penalty under section 90(10) of the Act, due to their failure to report as per section 90(1)." It further noted that LinkedIn India failed to issue necessary notices required under the Companies (Significant Beneficial Owners) Rules, 2018, resulting in additional violations and penalties under section 450 of the Act.

Next Steps and Appeal Process

LinkedIn India operates as a subsidiary of the Microsoft Group. The company and the penalized officers have the option to appeal the decision with the Regional Director (Northern Region) within 60 days from the date of receiving the order.

This enforcement action underscores the importance of compliance with SBO norms, aiming to ensure transparency and accountability in the ownership structures of companies operating in India.

Implications for Corporate Governance

The fines and penalties signal a stringent stance by the Corporate Affairs Ministry on adherence to corporate governance norms. Companies, especially multinational subsidiaries like LinkedIn India, must be diligent in their reporting obligations to avoid such punitive actions in the future. This case serves as a reminder of the critical nature of transparency in beneficial ownership and the legal consequences of non-compliance.

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