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The Ministry of Corporate Affairs has imposed a fine of Rs 27,10,800 on LinkedIn India (LinkedIn Technology Information Pvt Ltd), Satya Nadella (the Indian-born CEO of Microsoft), LinkedIn CEO Ryan Roslansky, and seven others for violating the significant beneficial owner (SBO) norms under the Companies Act.
Microsoft acquired the professional networking platform LinkedIn in December 2016 for $26.2 billion.
Failed to comply with the SBO regulations
In a 63-page order, the Registrar of Companies (NCT of Delhi & Haryana), a division of the Corporate Affairs Ministry, stated that LinkedIn India and the aforementioned individuals failed to comply with the SBO regulations stipulated by the Companies Act 2013.
The order noted, "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). Ryan Roslansky was appointed as the global CEO of LinkedIn Corporation on 1st June 2020 and started reporting to Satya Nadella."
It added that Ryan Roslansky, who was appointed as the global CEO of LinkedIn Corporation on June 1, 2020, began reporting to Satya Nadella thereafter.
Section 90 of the Act mandates companies to disclose details of their SBOs. The order also highlights that the company and its officers are liable for failing to take the necessary steps to identify the SBO in relation to the company.
Who all are fined?
LinkedIn India has been penalized Rs 7 lakh for violating SBO norms. Nadella and LinkedIn CEO Ryan Roslansky have been fined Rs 2 lakh each.
Keith Ranger Dolliver, Benjamin Owen Orndorff, Michelle Katty Leung, Lisa Emiko Sato, Ashutosh Gupta, Mark Leonard Nadres Legaspi, and Henry Chining Fong are other individuals who have been fined.
“Also, the company and its officers failed to even send a notice [which was mandatorily required to be sent] as per rule 2A (2) of the Companies (Significant Beneficial Owners) Rules, 2018 leading to a contravention of section 90(5) for which penalty has been provided under section 450. All the officers, including the non-executive directors, are liable for this violation due to the presumption of clear knowledge on the part of each of such directors about the holding structure of the company,” it said.
It's worth noting that the company can file an appeal against the order with the Regional Director (NR) within 60 days from the date of receipt of this order.