According to Section 248 of the Companies Act, the companies will be sent a notice, giving them time to respond. If they fail to respond, another follow-up notice will be sent a month after the initial one. Failure to respond to the notices will result in the removal of the companies.
Written By Anubhav Mukherjee
Published2 Aug 2024, 05:09 PM IST
The removal of the Chinese companies will reflect on the official Registrar of Companies (RoC), which will make these companies legally not recognised as valid businesses.(AFP)
The Ministry of Corporate Affairs (MCA), may remove as many as 400 Chinese companies in 17 states in the coming three months, reported Moneycontrol, quoting an anonymous government official on Friday, August 2. The report also said that more than 700 Chinese companies are under investigation by the MCA.
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“The inquiry on almost 600 Chinese companies stands completed. There will be a substantial number of anywhere between 300 to 400 companies which will be struck off. These include loan apps, online job companies, etc," said the government official as per the news report.
According to the report, the corporate ministry has been investigating the operations of loan apps in the country that carry out predatory lending practices, fraud, or any violation of financial regulations.
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India has seen growing concerns over the usage of digital lending apps. Some of these companies have links to Chinese corporates and, according to the report, have been accused of using aggressive tactics, excessively high interest rates, and unethical practices like harassment.
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The removal of these companies will reflect on the official Registrar of Companies (RoC), making these companies legally not recognised as valid businesses.
“In most cases, such companies are those that are not available at the registered offices. Some are those for which investment had come but are now into some other business. These are incorporation related fraud and financial frauds. Some companies have an Indian director, but the bank account is operated from China. There are companies which have had no transactions,” said the official, as per the report.
According to Section 248 of the Companies Act, the companies will be sent a notice, giving them time to respond. If they fail to respond, another follow-up notice will be sent a month after the initial one. Failure to respond to the notices will result in the removal of the companies.
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The official said, “The 300-400 firms likely to face striking off are based in 17 states, including Delhi, Bengaluru, Uttar Pradesh, Andhra Pradesh, Mumbai, Chennai, etc.”
Mobile component makers under investigation
The MCA ordered a further investigation into 30 to 40 more Chinese companies, including mobile components makers like battery manufacturers and mobile screen makers, as per the report, quoting an initial enquiry. Action will be taken if the inquiry report is sufficient; otherwise, officials will investigate the remaining cases further.