Archive · 2 Jul 2025
Govt Tightens Disclosure Rules on Corporate Structures
The government is making it harder for companies to hide money by using complex structures.
New rules mean companies must share more details about their subsidiaries, like who owns them.
This helps regulators stop companies from moving money around in secret, which can lead to problems like fraud.
Companies that don't follow the rules could face fines.
This is similar to rules put in place in 2017 to prevent misuse of company structures.
Government mandates higher disclosure norms for companies regarding subsidiaries.
Revised rules, effective July 14, require detailed information on each subsidiary and their holding company.
The move aims to strengthen compliance with 2017 restrictions on subsidiary layering.
Companies must provide information on registration type, ownership, and holding company details.
Penalties apply for false statements or withholding information under the Companies Act.
- Who
- The Ministry of Corporate Affairs is implementing the changes.
- What
- Government mandates higher disclosure norms for companies regarding subsidiaries.
- When
- New rules take effect from July 14.
- Where
- Not explicitly mentioned in the article.
- Why
- To prevent misuse of complex corporate structures for fund diversion and money laundering.
- Effective Date
- July 14
- Regulation
- Companies Act, 2013
- Form Revised
- CRL-1
- Restriction
- Two layers of subsidiaries
- Legal Basis
- Companies (Restriction on number of layers) Rules, 2017
- Penalties for False Statements
- Sections 448 and 449 of the Companies Act, 2013