The MCA said promoters of Zen Shaving had siphoned out the money they had received through an IPO issue.
The Mumbai bench of the National Company Law Tribunal (NCLT) passed an order seeking the removal of an auditor of a company that appeared to exist only on paper.
The order, a first of its kind, was passed under a provision of the Companies Act, 2013.
A case was filed by the Western Regional Director of the Ministry of Corporate Affairs (MCA) against Zen Shaving and its auditor Mukesh Manek Lal Choksi, which had proposed to come out with an initial public offering (IPO) to list on the Pune Stock Exchange.
The MCA said Zen promoters had siphoned out the money they had received through the IPO issue. As per rules, a company has to refund money raised through an IPO within 78 days.
Zen had also failed to file any financial statements since 1995.
The MCA official asked a series of questions to Choksi – ranging from location of the company’s manufacturing facilities, the last time its AGM was held, or the name of the company secretary. To each, Choksi replied: “I don’t know”.
The auditor also conceded the company did not have any business activity and that he had signed off on the audit certificate without examining the books.
Further, the auditor was also a shareholder of the company, which is prohibited by law.
The MCA found that Zen Shaving does not exist on the currently registered address, which has changed frequently in the past. The current directors of the company have also not been traceable since 2014.
Passing an order, the NCLT said Choksi would cease to be the auditor of Zen Shaving effective immediately.