Why LinkedIn, Microsoft CEO Satya Nadella faces Rs 27 lakh fine from Ministry of Corporate Affairs?

The Ministry of Corporate Affairs has levied fines against Microsoft-owned LinkedIn India, including CEO Satya Nadella and eight other individuals, for breaching significant beneficial owner norms as outlined in the Companies Act. This action stems from Microsoft's acquisition of LinkedIn in December 2016.

Violation of Significant Beneficial Owner Norms

In a detailed 63-page order, the Registrar of Companies (NCT of Delhi & Haryana) highlighted LinkedIn India and the individuals' non-compliance with the Significant Beneficial Owner (SBO) norms under the Companies Act, 2013.

The order specifically identifies Satya Nadella and Ryan Roslansky as Significant Beneficial Owners (SBOs) of the company, holding them accountable under section 90(10) of the Act for failing to report as mandated by section 90(1). Ryan Roslansky assumed the role of global CEO of LinkedIn Corporation on June 1, 2020, reporting to Satya Nadella.

Penalties Imposed

LinkedIn India and its officers are facing penalties totaling Rs 27,10,800 for their failure to identify the Significant Beneficial Owner (SBO) in relation to the company. The Registrar of Companies (RoC) has specifically imposed fines on LinkedIn Technology Information Pvt Ltd (LinkedIn India), Satya Nadella, LinkedIn CEO Ryan Roslansky, and seven other individuals.

LinkedIn India has been fined Rs 7 lakh for violating SBO norms, while fines of Rs 2 lakh each have been imposed on Satya Nadella and Ryan Roslansky, respectively. Additional fines have been levied on Keith Ranger Dolliver, Benjamin Owen Orndorff, Michelle Katty Leung, Lisa Emiko Sato, Ashutosh Gupta, Mark Leonard Nadres Legaspi, and Henry Chining Fong.

Failure to Comply with Notice Requirement

The penalties were primarily incurred due to the company and its officers' failure to send a mandatory notice as required by rule 2A (2) of the Companies (Significant Beneficial Owners) Rules, 2018. This omission resulted in a contravention of section 90(5), leading to penalties as outlined in section 450.

LinkedIn India, established as a subsidiary of the Microsoft Group, has the option to appeal against this order within 60 days from the date of receipt, directing appeals to the Regional Director (NR).