Let’s assume that Company A has the following members, as appearing on its register of members required to be maintained under section 119 of the Companies Act, 2017:
| Member | Ownership percentage |
| Mr. X | 10% |
| Mr. Y | 10% |
| Mr. Z | 10% |
| Company B | 30% |
| Company C | 40% |
Company B again has two natural persons Mr. BA and Mr. BB as its members holding 70% and 30% shares, respectively. Company C is a single member company with all its shares held by Mr. CA.
The ultimate beneficial owners of Company A in the given illustration would be as follows:
| Natural Persons | Registered Member of | Direct shareholding in Company A | Indirect shareholding in Company A | UBO (minimum 10% indirect shareholding threshold) |
| Mr. X | Company A | 10% | No | |
| Mr. Y | Company A | 10% | No | |
| Mr. Z | Company A | 10% | No | |
| Mr. BA | Company B | 21% (70% of 30%) | Yes (UBO of Company A) | |
| Mr. BB | Company B | 9% (30% of 30%) | No | |
| Mr. CA | Company C | 40%(100% of 40%) | Yes (UBO of Company A) | |
Company A would obtaining UBO information through Companies B and C following the mechanism, as illustrated in Q3 above.
Based on the aforesaid illustration, Company A would determine the ultimate beneficial ownership by calculating the product of shareholding of Company B in it and the shareholding of the natural persons who are members of Company B, with similar exercise to be carried out in case of Company C.
Mr. BA and Mr. CA would qualify for classification and recording of particulars as UBO in the records of Company A.
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