Section 216 of the Companies Act, 2013
Section 216 of the Companies Act, 2013
Title: "Investigation of ownership of company"
📘 Summary:
Section 216 empowers the Central Government to initiate an investigation to determine the true ownership or beneficial interest in a company’s shares. This is crucial in uncovering benami holdings, fraud, or illegal control of companies.
🔍 Key Provisions:
✅ 1. When can investigation be ordered?
The Central Government may order an investigation into a company’s ownership in the following cases:
To find out who has or had beneficial ownership of shares or rights over shares.
To determine who is in control or has a significant interest in the company.
If it's necessary in the public interest or to ensure proper governance.
🕵️ 2. Who conducts the investigation?
The investigation is carried out by an Inspector appointed by the Central Government.
📄 3. Powers of the Inspector:
Inspectors have wide-ranging powers, including:
Calling for documents,
Examining persons on oath,
Accessing records of related companies or persons.
🔄 4. Scope of Investigation:
The investigation may extend to:
Any other body corporate, or
Any person suspected of being involved in the beneficial ownership,
If such an entity is connected to the shareholding/control of the company under investigation.
⚖️ 5. Reporting:
The inspector submits a report to the Central Government after completing the investigation.
Based on this, the government can take appropriate legal or regulatory action.
🧾 Purpose:
To:
Prevent misuse of corporate structure for money laundering, fraud, or shell companies.
Detect and disclose real individuals/entities behind corporate veils.
Ensure transparency and accountability in corporate ownership.
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