In the course of taking another step towards lifting of corporate veil and to target the benami transactions, the government has decided introduce mandate to dematerialise the shares of even unlisted corporates. Separately, it has planned to change the definition of Significant beneficial ownership and include holdings above 10 percent under this definition and failure to report such beneficial ownership will attract huge penal consequencies. This move will possibly benefit in tracking the real ownership and the ultimate beneficial shareholders. This is expected to be announced in the next few weeks by the MCA, says TOI. This was also earlier reported by Economic Times back in September 2017.*

Even if this comes up, this will have to be taken up in a faced manner by the regulatory body i.e. MCA considering the numerous number of private and unlisted public companies. Having this in place will rule out the situation where the shareholders of private companies holding huge value properties and being untraceable, since the DEMAT will be linked to the PAN and AADHAR of the shareholders. This will ease the government to identify the chain of benami transactions to a greater extent. Also all the chain transactions of such shares will be identified by just one click by various authorities viz. income-tax, etc. Today, since these transactions are not in DEMAT, the transactions are left unobserved by the tax authorities. To conclude, these will help the government to further organise and regularise the functioning of unlisted companies.

* https://economictimes.indiatimes.com/markets/stocks/news/government-plans-to-dematerialise-shares-of-unlisted-companies-to-crack-down-on-black-money/articleshow/60415992.cms

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