In Short:
The Ministry of Corporate Affairs fined Samsung Display Noida and its MD for not following the Companies Act, 2013 rules on disclosing significant beneficial owners. The company was not diligent in identifying the SBOs. This is a growing concern for the ministry, as seen in recent penalties on other foreign-owned companies. Samsung Display Noida and the individuals involved have 90 days to pay the fines and can appeal within 60 days.
Penalties Imposed on Samsung Display Noida Private Ltd for Violation of SBO Norms
The Ministry of Corporate Affairs (MCA) has issued penalties amounting to Rs 8,14,200 on Samsung Display Noida Private Ltd, its managing director Seung Kyu Lee, and three others for allegedly violating the significant beneficial owner (SBO) norms under the Companies Act, 2013.
Violation of SBO Norms
In its order dated June 12, the Registrar of Companies (RoC) for Uttar Pradesh under the MCA stated that the company “has failed to exercise the due diligence to ascertain the SBO in terms of the provisions of section 90 of the Act.”
According to the order, Samsung Display Noida’s February 2024 letter revealed that it is fully owned by Samsung Display Co (Korea), which is 84.8% owned by Samsung Electronics Co (Korea). Section 90 of the Companies Act, 2013, mandates companies to disclose their significant beneficial owner details to authorities.
Penalties and Compliance
The penalties imposed include Rs 5 lakh on Samsung Display Noida, Rs 1 lakh on Seung Kyu Lee, and a total of Rs 2,14,200 on three other individuals associated with the company. Samsung Display Noida and its officers have been instructed to identify all individuals falling under the definition of ‘significant beneficial owner’ and submit relevant details within 90 days from the order date.
This enforcement action follows recent penalties on Microsoft-owned LinkedIn India and individuals for similar violations, illustrating the MCA’s focus on ensuring transparency regarding significant beneficial owners, especially in foreign-owned local entities.
Appeal Process
The company and individuals fined have 90 days to deposit the penalties. They can appeal the order within 60 days to the MCA’s regional director (northern region) for review.
Source: Economic Times
