Tracing The Invisible Owner: The Limits Of India’s Significant Beneficial Ownership Framework
- IJLLR Journal
- 4 days ago
- 2 min read
Swati Giri, National Law Institute University, Bhopal
Khushi Dhingra, Animesh Chaturvedi, National Law Institute University, Bhopal
ABSTRACT
The identification of beneficial ownership has emerged as a central pillar of global corporate transparency reform, driven by concerns relating to money laundering, tax evasion, corruption, and illicit financial flows. The Indian regime seeks to pierce formal shareholding patterns and trace ultimate natural persons who own or exercise control over companies.
This article critically examines whether the Indian SBO framework effectively captures real economic control in contemporary corporate structures. It argues that while the regime is normatively justified and aligned with international transparency standards, its reliance on rigid ownership thresholds and formalized control tests reveals structural limitations. Modern corporations frequently separate ownership from control, diffuse economic interests across institutional investors, and embed governance authority within contractual arrangements rather than equity stakes. In such an environment, a threshold-driven compliance model risks both over- inclusion—capturing passive financial investors—and under-inclusion— failing to expose shadow controllers operating through layered, cross-border structures.
Drawing on real-world corporate episodes in India and comparative regulatory approaches, this article demonstrates how institutional intermediation, sovereign and fund-based ownership, and complex financial structuring complicate the identification of a single “ultimate natural person.” It further analyzes enforcement constraints, including reliance on self-declaration, limited verification mechanisms, and restricted public accessibility of ownership data, which collectively weaken the regime’s deterrent effect.
The article concludes that meaningful transparency requires a shift from formal percentage-based metrics toward a more substance-oriented and risk- based understanding of control. Without recalibrating its conceptual foundation and strengthening enforcement architecture, India’s SBO framework may succeed in documenting ownership while failing to
illuminate power.
Keywords: Significant Beneficial Ownership, Corporate Transparency, Beneficial Ownership, Corporate Control, Enforcement, Compliance, Veil Piercing.
