Excl: MCA likely to strike off upto 400 Chinese companies over next 3 months

Over 700 Chinese companies are under probe by the MCA

The Ministry of Corporate Affairs is likely to strike off as many as 400 Chinese companies in 17 states over the next three months due to incorporation and financial frauds. Over 700 Chinese companies are under probe by the MCA, a government official said.

“The inquiry on almost 600 Chinese companies stands completed. There will be a substantial number of anywhere between 300-400 companies which will be struck off. These include loan apps, online job  companies, etc.,” the official told Moneycontrol.

MCA has been investigating loan apps operating in the country focused on predatory lending practices, fraud or violation of financial regulations. In recent years, there has been growing concern over the proliferation of digital lending apps in India, some of which have been linked to Chinese companies. These apps have been accused of employing aggressive tactics, charging exorbitant interest rates and engaging in unethical practices such as harassment of borrowers.

When a company is struck off, it is removed from the official Registrar of Companies (RoC) and ceases to be legally recognised as a valid business.

“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,” the official said.

Under Section 248 of the Companies Act, closure of the businesses takes three months. A notice will be sent to these firms giving them time to respond and after a gap of one month a second notice will be sent. If there would be no response, these will be struck off.

“The 300-400 firms likely to face striking off are based in 17 states, including Delhi, Bengaluru, Uttar Pradesh, Andhra Pradesh, Mumbai, Chennai, etc.,” he said.

Mobile screen, battery makers under probe

Further investigation has been ordered on another 30-40 Chinese companies, including mobile screen and battery manufacturers, based on initial inquiry findings. If the inquiry report is sufficient then action is taken, and the remaining are investigated further based on findings.

There has been heightened scrutiny of Chinese investments and business activities in India. The Indian government has taken various measures to ensure transparency and accountability in dealings involving Chinese companies, particularly in sensitive sectors such as technology, infrastructure and finance.