Regulatory action against Nidhis, non-disclosure of beneficial ownership jump

Regulatory action against Nidhi companies or mutual benefit societies, and firms defaulting on their beneficial ownership disclosure have shot up in 2024 compared to previous years, official data from the Registrars of Companies showed. Surge in regulatory action The RoC action against defaulters of beneficial ownership disclosures also skyrocketed in 2024, with 79 adjudication notices to companies under sections 89 and 90 of the Companies Act in 2024, a massive surge compared to three notices sent the year before, MCA data showed. “From the tremendous surge in adjudication orders issued by ROCs for sections 89 & 90 of the Companies Act in the past few months, it can be considered that the department is going beyond the letter of law and looking at the intent while analysing the corporate structures keenly to identify potential significant beneficial owners or SBOs," said Maheshwari. "Failure to disclose beneficial ownership has profound legal and operational implications, as it conceals the true individuals exercising control over a company, facilitating illegal activities such as money laundering, terrorism financing, and tax evasion," said Harshita Agarwal Sharma, founder, Lexlevel Services, adding that such opaqueness undermines corporate governance by limiting stakeholder oversight and exposing minority shareholders to potential exploitation or fraud.