MCA probing Snapdeal, part of a wider investigation into past Chinese investments in 700 companies

RoC submitted an initial inquiry report on Snapdeal, prompting the MCA to order a deeper investigation into the platform.

The Ministry of Corporate Affairs (MCA) has initiated a probe into e-commerce platform Snapdeal for alleged regulatory violations and non-compliance with the Companies Act, a government official familiar with the matter told Moneycontrol.

The probe was launched after the Registrar of Companies (RoC) flagged irregularities in its report, the official said on condition of anonymity.

The investigation is part of a broader probe by the ministry into more than 700 companies, which are the recipients of investments from Chinese entities, several of which are facing scrutiny based on RoC findings.

"The RoC submitted an initial inquiry report on Snapdeal, prompting the MCA to order a deeper investigation into the platform," the official said. “The previous Chinese investments in the company will be examined."

Founded in 2010, Snapdeal, a part of the AceVector Group, has had Chinese investment, with Alibaba holding a 3 percent stake from 2015 until its exit in 2021.

An AceVector spokesperson told Moneycontrol, “AceVector Limited received a request for information from MCA in May 2024. The company has furnished relevant information and remains committed to addressing further queries in accordance with the law and in line with its high standards of governance. AceVector Limited has no Chinese investor in the company.”

AceVector Limited, formerly Snapdeal Limited, counts Starfish I Pte Ltd, a SoftBank entity, as its largest shareholder with a 35.4 percent stake.

The investigation could take up to six months to complete, the official said.

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The ministry, through the Office of Regional Director (North Region), issued a letter on May 13 to AceVector Limited, its directors Kunal Bahl and Rohit Kumar Bansal and key managerial personnel under Section 206(5) of the Companies Act, 2013.

The letter requested information pertaining to AceVector’s business, its authorised share capital and working results.

The ministry has also directed AceVector and its directors to provide among others copies of the minutes of its board and shareholders’ meetings held in the past five years, copies of statutory registers, secretarial records, financial statements  and information, copies of income  tax  returns  and  assessments  orders  received  by  AceVector  and  its directors  since  incorporation.

AceVector on May 24 agreed to cooperate fully with the investigation.

The matter was under review, the red herring prospectus of AceVector promoted Unicommerce eSolutions Limited, filed with SEBI on July 30, said. Unicommerce made its market debut on August 13.