9911796707
TMI Blog2024 (7) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... t B/1D Sector 81, Phase II, Noida, Gautam Buddha Nagar, Uttar Pradesh, 201305, India. The shareholding details of 'the reporting company' as per list of shareholders attached to e-form MGT-7 for FY 2022-23 is as follows: - Shareholding details Sl. No. Name of shareholder(s) Number of Equity shares (face value of Rs. 10 each) % Holding 1. Samsung Display Co. Ltd, Korea (SDC, Korea) 3,49,99,999 99.99 2. *Mr. Jin Suk Lee 01 Negligible Total 3,50,00,000 100 * *As a nominee of Samsung Display Co. Ltd, As per reply of the company dated 24.04.2024, there is no change in the shareholding of SDC, Korea in SDN since incorporation of SDN. At the time of incorporation, the details of subscribers were as follows: Sl. No. Name of subscriber(s) Number of Equity shares (face value of Rs. 10 each) % Holding 1. Samsung Display Co. Ltd, Korea (SDC, Korea) through its Authorized Representative: Mr. Jaeho Shin 3,49,99,999 99.99 2. *Mr. Jeeyong Chung 01 Negligible Total 3,50,00,000 100 * *As a nominee of Samsung Display Co. Ltd. 3. That the provisions of Section 90 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner with the company as required under this section. (6) The information required by the notice under sub-section (5) shall be given by the concerned person within a period not exceeding thirty days of the date of the notice. (7) The company shall- (a) where that person fails to give the company the information required by the notice within the time specified therein; or (b) where the information given is not satisfactory, apply to the Tribunal within a period of fifteen days of the expiry of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the shares and such other matters as may be prescribed (8) On any application made under sub-section (7), the Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of sixty days of receipt of application or such other period as may be prescribed (9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , directly or indirectly, in the financial and operating policy decisions of the reporting company but is not control or joint control of those policies. 5. That Rule 2(1)(h) of the Companies (Significant Beneficial Owners) Rules, 2018 of the Act defines "Significant Beneficial Owner" in relation to a reporting company means an individual referred to in sub-section (1) of section 90, who acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company, namely: -(i) holds indirectly, or together with any direct holdings, not less than ten per cent. of the shares; (ii) holds indirectly, or together with any direct holdings, not less than ten per cent. of the voting rights in the shares; (iii) has right to receive or participate in not less than ten per cent. ofthe total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;(iv) has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone: Explanation I. - For the purpose of this cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted. The reporting company stated that they are 100% owned by SDC, Korea and 84.8% of SDC, Korea shareholding is held by Samsung Electronics Co., Ltd, Korea ("SEC, Korea") and 15.2% is held by Samsung SDI Co. Ltd., Korea ("SDI, Korea"). Further both SEC, Korea and SDI, Korea are listed on the Korean Stock Exchange. The reporting company submitted its corporate structure of the company and the extract of the chart is as follows: Reference A: Details of Corporate Structure as submitted by the Reporting Company Further, the reporting company in its reply stated that a self-evaluation for the identification of the SBO through their holding companies located outside India i.e., SDC Korea and SEC Korea was made on the data based on the shareholding pattern as on 31.12.2022. Since both SDC , Korea and SEC, Korea are listed companies at Korean Stock Exchange, accordingly the reporting company concluded that no individual SBO who directly or indirectly, acting alone or together holds the majority in SDC, Korea (the holding company) and SEC, Korea (the Ultimate parent company), hence no individual falls under the category of SBO under Section 90 read with SBO Rules, made thereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Owners) Rules, 2018 of the Act and the Explanation I & Ill to it, in support of its stance that Section 90 of the Act is not applicable and the reporting company is a separate and independent legal entity and is being managed completely by its Board of Directors. Further, no individual has neither majority stakes nor more than 10% stakes neither in the immediate Holding company or in the Ultimate Holding Company of 'the reporting company'. 10. The response submitted by 'the reporting company' dated 24.04.2024, was examined and it was observed that the response was not acceptable as it was not in consonance with the essence of Section 90 of the Act, which reads " ............with respect to every individual who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than 10% in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause 27 of section 2 over the company........................ .. " Thus, the reporting company did not take necessary measures or steps to identify an individual who i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal or profits of the partnership. c. Where the customer is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/have ownership of/entitlement to more than 15 per cent of the property or capital or profits of the unincorporated association or body of individuals. Explanation: Term 'body of individuals' includes societies. Where no natural person is identified under (a), (b) or (c) above, the beneficial owner is the relevant natural person who holds the position of senior managing official, d. Where the customer is a trust, the identification of beneficial owner(s) shall include identification of the author of the trust, the trustee, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership. Part IV - Identification of Beneficial Owner 34. For opening an account of a Legal Person who is not a natural person, the beneficial owner(s) shall be identified and all reasonable steps in terms of Rule 9(3) of the Rules to ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ownership of Samsung Display Noida Private Ltd. The term "Ownership" clarified by SEC, Korea at the foot notes, defines ownership of the voting rights in each of its entities including subsidiaries ownerships. As such it is recognized and documented that SEC, Korea has 100% ownership of the voting rights in Samsung Display Noida Private Ltd. b. In Reference A above, the details of the corporate structure of the reporting Company as submitted by it has been reproduced. As per the said structure, the late Mr. Lee Kun Hee and his family holds around 21.46% shares of the SEC, Korea directly and the remaining 78.54% shares are held by other minority shareholders. A further investigation into the shareholding pattern as available on the website of SEC, Korea and Korean Stock Exchange, revealed that Mr. Lee Jae-Yong son of late Mr. Lee Kun Hee, along with his family, also holds a significant stake in two other entities of the group i.e., Samsung Life Insurance Co, Ltd and Samsung C&T, which holds around 8.64% and 5.01% shares respectively in SEC Korea. The reporting company did not furnish the full details of the minority shareholders to the Registrar despite been given opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been appointed as the Executive Chairman and what powers he exercises over the Board of Directors of SEC, Korea. 15. It appears that the Samsung Group controls more than 80 subsidiaries globally. Approximately 19 of Samsung's subsidiaries are publicly traded on the Korean stock market. Samsung is a large family-owned company in South Korea. As per articles in public domain, Samsung is led by Lee Jae-Yong, a direct descendant of the company's founder. Lee Jae-Yong (also known as Jay Y.Lee) stepped up as Samsung Executive Chairman in October, 2022. The Lee family owns enough shares in each subsidiary, both directly and indirectly, to steer the entire company. For example, SEC, Korea is partially owned by two other subsidiaries; Samsung Life Insurance and Samsung C&T. Although Samsung's Chairman Mr. Lee Jae-Yong has a much smaller individual stake than either of those subsidiaries, however, Lee holds a large stake in the subsidiaries through cross-ownership and he has control over Samsung Electronics indirectly which is the crown jewel of Samsung Group. Samsung's subsidiaries' ownership in each other helps the Lee family to keep control globally. (Source: andr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors or professionals, and they have never been on the Board of Directors of the reporting company or its immediate Holding Company, i.e., SDC, Korea. Hence the reporting company stated that no action u/ s 90(5) of the Act for issuance of BEN-4 to the immediate Holding Company was required. It is noted that under sub-rule 2 of rule 2A of the SBO Rules made thereon, a duty has been cast on the reporting company to give Form BEN 4 seeking the information as required under Section 90(5) of the Act, to all members other than individuals who hold not less than 10% of its shares or voting rights or right to participate in dividend. Considering that the reporting company is a wholly owned subsidiary of SDC, Korea, and has SEC, Korea as the ultimate parent company, it was bound by the law of the land at the first instance to serve Form BEN 4 to the immediate Holding Company irrespective of the fact as to whether there is an SBO or not. The reporting company has failed to discharge its obligation u/s 90 (5) of the Act r/w sub-rule 2 of Rule 2A of the SBO Rules made thereon. As a result of this failure, the Reporting Company has absolved the immediate Holding Company from the statutory o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period is for 1212 days. A. Calculation of Penalty imposed for violation of Section 90 r/w SBC) Rules made there under of the Companies Act, 2013:- Violation Section Penalty imposed on & Period Calculation of penalty amount (in Rs.) Penalty imposed as per Section 90(10) /90(11) of CA, 2013 (in Rs.) A B C D Section 90(4A) of CA, 2013 Samsung Display Noida Private Limited (company) Default of 1212 days i.e. from 21.12.2020 to 15.04.2024 1,00,000 + 1212 x 500 = 7,06,000 Subject to maximum 5,00,000 5,00,000 Seung Kyu Lee (Director from 22.03.2023 to till date) Default of 391 days i.e. from 22.03.2023 15.04.2024 25,000 + 391 x 200 = 1,03,200 Subject to maximum 1,00,000 1,00,000 Joogon Seok (Director from 01.10.2023 to till date) Default of 198 days i.e. from 01.10.2023 to 15.04.2024 25,000 + 198 x 200 = 64,600 Subject to maximum 1,00,000 64,600 Tarun Kumar Rastogi (Ex, CS, KMP from 20.11.2019 to 30.11.2023) Default of 1075 days i.e. from 21.12.2020 to 30.11.2023 25,000 + 1075 x 200 = 2,40,000 Subject to maximum 1,00,000 1,00,000 Hemant Gupta CCS, KM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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