Indian Government Imposes Fines on Microsoft's Satya Nadella for Regulatory Non-Compliance

In a significant development, Microsoft's CEO Satya Nadella, along with several top executives of LinkedIn, a subsidiary of Microsoft, have been fined by the Indian corporate affairs ministry for failing to comply with regulatory requirements. The fines stem from LinkedIn India's failure to adhere to beneficial ownership disclosure norms outlined in Section 90 of the Companies Act, 2013.

According to the Registrar of Companies (RoC)'s detailed 63-page order, LinkedIn India, Nadella, LinkedIn CEO Ryan Roslansky, and seven other individuals faced penalties totaling ₹27,10,800 for the violation. These penalties were issued under Section 90 of the Act, which mandates companies to disclose details of their significant beneficial owners (SBOs) who exert control or possess substantial interests in the company.

The crux of the matter lies in the failure of Nadella and Roslansky to report their ownership as required under Section 90(1) of the Act. Despite being considered SBOs of LinkedIn India, their ownership details were not disclosed, leading to the imposition of fines. LinkedIn India, the professional networking platform owned by Microsoft, bore a penalty of ₹7 lakh, while Nadella and Roslansky individually faced fines of ₹2 lakh each. Additionally, other executives involved in the non-compliance were also penalized.

In response to the regulatory order, LinkedIn issued a statement affirming their commitment to compliance with local laws.  It's worth noting that LinkedIn was established as a subsidiary of Microsoft after its acquisition in December 2016, and the company remains dedicated to legal adherence and ethical business practices.

The violation also extended to the failure to send mandatory notices as per rule 2A(2) of the Companies (Significant Beneficial Owners) Rules, 2018, leading to a contravention of Section 90(5). This lapse resulted in penalties under Section 450 of the Act. The order underscored that all officers, including non-executive directors, were held liable for this violation due to the presumption of clear knowledge regarding the holding structure of the company.

Satya Nadella, in his role as the chief of Microsoft, oversees LinkedIn, which operates as a subsidiary of the Microsoft Group. However, despite the acquisition, LinkedIn India's non-compliance with regulatory norms has led to significant fines for both the company and its key executives.

This incident highlights the critical importance of corporate transparency and regulatory compliance, particularly in the context of multinational corporations operating in diverse regulatory environments. As technology companies expand their global footprint, adherence to local laws and regulations becomes paramount to avoid legal repercussions and maintain trust among stakeholders. The case serves as a reminder for companies to prioritize compliance and diligently fulfill their obligations under the law to uphold integrity and accountability in their operations.