BENGALURU: The Ministry of Corporate Affairs has imposed fines of Rs 2 lakh each on Microsoft-owned LinkedIn India, its India-born CEO Satya Nadella, and the professional networking site's Ryan Roslansky for non-compliance with a provision of the Companies Act related to disclosing "significant beneficial ownership" (SBO).

According to the Registrar of Companies (RoC) for Delhi and Haryana, Nadella and Roslansky have been fined Rs 2 lakh each, while 18 other entities, including directors, face penalties ranging between Rs 50,000 and Rs 5 lakh, which is the maximum provided under the Companies Act.

The government introduced SBO rules in 2019, mandating disclosure by entities, including individuals, holding significant beneficial ownership in a company. In its 63-page adjudication order, the RoC has determined that Nadella and Roslansky are SBOs.

Satya Nadella's compensation in 2023 was reportedly over $48 million, and since taking over in February 2014, he has earned over $1 billion, according to SEC filings. Microsoft, in response to the RoC, maintained that it had complied with Indian regulations.

Responding to a query from TOI, LinkedIn said, "We comply with the laws of the countries we operate in. We are reviewing the order to determine next steps."

Filings from January showed that LinkedIn Technology Unlimited is a registered holder and LinkedIn Ireland Unlimited is a beneficial owner of one share of the subject company, with January 11 shown as the date of creation of beneficial interest. However, the RoC argued that this contradicted filings in the financial statements, which indicated that the beneficial interest had arisen earlier.

LinkedIn responded by stating that the existence of beneficial ownership had been noted in filings since 2014-15, and January 11 was "erroneously" shown as the date of creation. The RoC argued that the disclosure should have been made since the incorporation of the company in 2009.

The RoC also cited provisions of the law providing for a penalty against the registered holder and beneficial holder of shares if the declarations were not made. LinkedIn stated that there are no individuals holding more than a 10% stake in Microsoft Corporation and that there is no significant beneficial owner in LinkedIn India.

The registrar concluded that Ryan Roslansky is an SBO due to "his ability to exercise control" over the board of directors of LinkedIn India.

"It is also evident that LinkedIn itself has disclosed on its website that Mr. Ryan Roslansky reports to Mr. Satya Nadella and is part of Microsoft's senior leadership team. This fact is corroborated by the annual report of Microsoft Corporation. Thus, Mr. Satya Nadella is also an SBO of the subject company under section 90," the RoC concluded.

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