Delhi HC stays MCA fines on Microsoft CEO Satya Nadella, LinkedIn executives

The Delhi High Court Thursday held in abeyance the ministry of corporate affairs' fines imposed on Microsoft Corp CEO Satya Nadella, LinkedIn chief Ryan Roslansky, LinkedIn India and several of its current and former directors for alleged failure to disclose "significant beneficial ownership” (SBO) in LinkedIn Technology Information, an Indian company.

Justice Anish Dayal, while seeking response from the ministry on a petition by Nadella and others, said “this court deems it fit to stay the operation of impugned orders till the next date of hearing," on October 6.

The Registrar of Companies (RoC) in its 63-page order had held that Microsoft, LinkedIn and its officials had failed to send a notice to it, as mandated by the Companies (Significant Beneficial Owners) Rules, disclosing themselves as significant beneficial owners in LinkedIn India.


“LinkedIn itself disclosed on its website that Ryan Roslansky reports to Nadella and is part of Microsoft’s senior leadership team… Nadella is also a significant beneficial owner of the subject company under Section 90,” the RoC said.

It said the law does not require a significant beneficial owner to necessarily participate in the day-to-day operations of a company or have direct control over its affairs. “It is clear that control, or the right to exercise such control or significant influence indirectly, also amounts to the exercise of control and significant influence,” the RoC had said.

A regional director of the MCA in February affirmed the RoC May 2024 findings, holding that Nadella and others to be in violation of Section 90 of the Companies Act relating to disclosure of SBO.

Nadella and others then moved the court against the RoC order arguing that the required declarations had already been filed on January 29, 2024.

Senior counsel Gopal Subramanium, appearing for the petitioners, told the court that the RoC wrongly relied on disclosures made before the United States Securities and Exchange Commission (SEC) by Microsoft Corporation’s CEO. Disclosures made under US securities law are distinct from the SBO framework under Indian company law, he said.

Apart from this, the RoC had roped in all petitioners in the order imposing penalty, despite there being no occasion for petitioners to make a declaration under Sections 89 and 90 of the Companies Act, 2013, the senior counsel argued.