LinkedIn moves NCLAT against ₹27L penalty imposed by RoC
What's the story
LinkedIn, the professional networking platform owned by Microsoft, has challenged a penalty imposed by India's Registrar of Companies (RoC). The RoC had fined LinkedIn India, LinkedIn Ireland, Satya Nadella and LinkedIn CEO Ryan Roslansky ₹27 lakh over alleged lapses in disclosing significant beneficial ownership (SBO) details. LinkedIn challenged the order before the National Company Law Appellate Tribunal (NCLAT). The appeal was filed on May 15, and interim relief has now been granted by staying the RoC order.
Corporate governance
Case could have broader implications for MNCs in India
The case is being closely watched as it could have wider implications for multinational corporations operating in India and the interpretation of India's SBO framework. The RoC had argued that Nadella and Roslansky exercised control over LinkedIn, thus falling within the definition of Significant Beneficial Owners under the Companies Act. However, LinkedIn contended that no specific shareholder holds a significant stake in its parent company Microsoft.
Filing discrepancies
Legal experts weigh in on SEC filings
A key aspect of the dispute is the RoC's reliance on Microsoft filings before the US Securities and Exchange Commission (SEC). The RoC used Form 4S filings made by Nadella to conclude he exercised control over LinkedIn India. However, legal experts have pointed out that Form 4S cannot be compared with India's SBO filing forms as they serve different purposes.
Compliance concerns
Potential impact on MNC compliance obligations
If the RoC's interpretation is upheld, it may significantly alter compliance obligations for multinational firms operating in India. Legal experts have warned that if the RoC wins this litigation, it would have a huge impact on MNCs, which may now have to disclose their top global executives as beneficial owners. The case raises a nuanced issue as the RoC has penalized a CEO rather than a shareholder.