On May 22, the Ministry of Corporate Affairs (MCA) fined Linked-In India. The Microsoft-owned professional networking platform was issued a 63-page order. Chief Satya Nadella and CEO Ryan Roslansky, among others, were also fined.
RoC Issues Order
The Registrar of Companies (NCT of Delhi & Haryana) states that LinkedIn India and individuals in the company have violated the Significant Beneficial Owner (SBO) norms under the Companies Act, 2013.
The 63-page order states –
“… 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.”
Later on, it states –
“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.”
Linked-In India and Officers To Pay Fine
Per the order, the company and its officers are responsible for not identifying the SBO for the company.
Due to this, the RoC has penalized the company and its officers Rs 27,10,800. LinkedIn Information Technology, Nadella, LinkedIn CEO Ryan Roslansky, and seven more related individuals.
LinkedIn India’s penalty for SBO norm violations is Rs 7 Lakhs. Nadella and Rolansky have been fined Rs 2 Lakhs each.
Keith Ranger Dolliver, Benjamin Owen Orndorff, Michelle Katty Leung, Lisa Emiko Sato, Ashutosh Gupta, Mark Leonard Nadres Legaspi, and Henry Chining Fong are among those to be fined.
Linked-In’s Response
An appeal against the order can be filed with the Regional Director within 60 days of its issuance.
LinkedIn India is reviewing the order and determining the next crucial steps.
“We comply with the laws of the countries we operate in. We are reviewing the order to determine the next steps,” they said to TNIE.
What Happens Now?
According to Vishwas Panjiar, Partner, Nangia Andersen LLP, “The RoC has taken a rather harsh stand in dealing with the purported non-compliance by LinkedIn India as it not only rejected LinkedIn India’s request of withdrawal of the impugned form and also relied on publicly available information to conclude.”
It is hard to say what will happen at this point; some believe the fine to be harsh. Yet LinkedIn India is also responsible for failing to identify its SBOs. The situation will be clearer after LinkedIn India has determined its next steps and acted on them.
