According to a government official, in the next three months, the Ministry of Corporate Affairs (MCA) is set to strike off up to 400 Chinese companies across 17 states due to incorporation and financial frauds. Presently, over 700 Chinese companies are under MCA investigation.
Prolonged Investigations and Company Termination Process
As per the officials, the inquiry on 600 Chinese companies is finished. “There will be a significant number of approximately 300-400 companies that will be de-registered. These companies include loan apps, online job companies, etc.”
The Ministry of Corporate Affairs (MCA) has been conducting thorough investigations into loan apps involved in predatory lending practices and violations of financial regulations. Many of these apps, linked to Chinese firms, have been criticized for using aggressive tactics, charging excessive interest rates, and engaging in unethical borrower harassment.
Operational and Legal Repercussions
Striking off a company involves removing it from the Registrar of Companies (RoC), essentially making it legally non-existent. In many cases, these companies are not found at their registered offices. Some of them received investment but have now shifted to other business activities. These cases involve fraud related to incorporation and finance.
Additionally, some companies have an Indian director, but their bank accounts are operated from China. Some companies have had no transactions.
Adhering to Section 248 of the Companies Act
U/s 248 of the companies act the process of closure takes 3 months. A notice is sent before the implicated firms followed via a second notice post 1 month when there is no reply. If there is no answer then the company gets struck off.
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Extensive Effect in Several States
The 300-400 firms facing striking-off are located in 17 states and major hubs such as Delhi, Bengaluru, Uttar Pradesh, Andhra Pradesh, Mumbai, and Chennai.
Additional Research on Manufacturers of Mobile Screens and Batteries
Investigations have been ordered for 30 to 40 Chinese companies along with the mobile screen and battery manufacturers. The measure shall be opted based on the adequacy of the inquiry report, and additional investigation shall be carried on for the the remaining companies based on the determinations.
Increased Inquiry into Chinese Investments
The scrutiny from the Indian government has increased on Chinese investments along with business activities specifically in sensitive sectors like technology, infrastructure, and finance. It increases the motive for vigilance to ensure precision and accountability in dealings that involve Chinese companies.
Closure
The strict actions of the MCA show the government’s devotion to curbing bogus measures and ensuring regulatory compliance among foreign firms that function in India. Strike-off on the Chinese companies shows the measures to protect the Indian market from unethical practices.
