Which companies are required to comply with the provisions of Circular no. 16 of 2018 read with Circular no. 20 of 2018?

The aforesaid Circulars are only applicable upon those companies which have:

a. One or more legal persons/companies as their member or shareholder, AND
b. Such legal persons/companies hold not less than 10% ownership or control rights in the companies subject to requirement of these Circulars

Because a company is not directly aware of the pattern of shareholding of the legal persons appearing as its members, it would determine the status of Ultimate Beneficial Ownership (UBO) of the natural persons who are the members or shareholders of the legal persons, after obtaining information in respect of them. Only if the indirect shareholding of any such natural person, which is arrived at by multiplying his ownership percentage in the legal person with the ownership percentage of the legal person in the company, is not less than 10%, his particulars would be entered in the register of UBO to be maintained by the company.

For instance, as per illustration given in Q1 above, assume that Company 2 has a legal person Company 1 as its member with 80% of its share capital held by it, and Company 1 has a natural person Mr. X with 20% shares in Company 1. Mr. X would be classified as a UBO through the following calculation:
Mr. X direct percentage shareholding in Company 1 = 20%
Mr. X indirect shareholding in Company 2

= (Shareholding percentage of Company 1 in Company 2) X (Shareholding percentage of Mr. X in Company 1)
= 80% X 20% (i.e. 20% of 80%)
= 16%
In the given illustration, Mr. X holding more than 16% shares in Company 2 through Company 1 would be classified as a UBO in Company 2. Company 2 would be required to enter particulars of Mr. X as specified in Circular no. 16 of 2018 in its register of UBO. For