Ministry Of Corporate Affairs News: Ministry of Corporate Affairs searches 300 entities with Chinese nationals on board – The Economic Times

lipped from: https://economictimes.indiatimes.com/news/india/corp-ministry-searches-300-entities-with-chinese-nationals-on-board/articleshow/94083885.cms

Synopsis

This is probably the first instance of a pan-India coordinated search operation by the ministry to crack down on entities having Chinese nationals on board.

The Ministry of Corporate Affairs (MCA) Thursday carried out searches on 300 entities having Chinese nationals on board after its preliminary found them to be engaged in ‘dubious activities’. The searches were carried out at various locations including in DelhiHyderabada and Bengaluru after the MCA‘s probe found that many of these were “shell entities” formed forging credentials and subsequently had Chinese nationals on board who controlled the affairs of the companies.

This is probably the first instance of a pan-India coordinated search operation by the ministry to crack down on entities having Chinese nationals on board. In April, the MCA had registered over 700 cases across the country against companies with Chinese nationals as promoters and directors. Among those under probe include Vivo, Xiaomi, Oppo and several India units of Alibaba. “The Company Act empowers the Registrar of Companies (RoC) or the inspector (of MCA) to carry out search and seizure operations. This is done once the preliminary probe indicates there are reasons to believe that companies are violating the provisions of the Act,” said an officer privy to the development.

These sources added the MCA’s probe found that most of these entities employ a similar modus operandi: the local entities are incorporated by filing fabricated documents and registering them when the companies don’t actually exist. These firms are later transferred to the Chinese partners by cheating the RoC,” explained another official. “Now with the preliminary probe indicating this, searches were necessary to gather evidence. In many cases they have been found in dubious businesses like offering instant loans through mobile applications and then threatening or blackmailing the customers to pay twice or thrice the amount availed or in certain cases they are used as a vehicle for money laundering,” added the official.

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