Mumbai . The Ministry of Corporate Affairs may shut down more than 400 Chinese companies in 17 states of the country within the next three months due to incorporation and financial frauds. According to a report, more than 700 Chinese companies are under the scrutiny of MCA.
Investigation of 600 Chinese companies completed
According to the report, investigation of about 600 Chinese companies has been completed. Out of these, 300-400 companies can be closed, which include many companies including loan apps and online jobs.
Check out loan apps
The ministry is investigating loan apps operating in the country that are involved in bad lending practices, fraud or violating financial regulations. In recent years, the rise of digital lending apps in India has also raised concerns, some of which are linked to Chinese companies. These apps have been accused of adopting aggressive strategies, charging excessive interest rates and engaging in unethical practices such as harassing loan borrowers. When a company is struck off, it is removed from the official Registrar of Companies and is no longer legally recognised as a valid business.
Financial fraud data
According to the report, in most cases such companies are those which do not exist in their registered offices. There are some in which investments were made but now they are engaged in some other business. These are incorporation related frauds and financial frauds. Some companies have Indian directors but their bank accounts are operated from China.
It takes three months to close the business
Under Section 248 of the Companies Act, it takes three months to close the business. These companies will be given time to respond by sending a notice and a second notice will be sent after a gap of one month. If no response is received, they will be closed. The 300-400 companies that are likely to be closed during this period are located in 17 states, including many cities including Delhi, Bengaluru, Uttar Pradesh, Andhra Pradesh, Mumbai and Chennai.
These companies may also face action
According to the report, investigations have also been ordered against 30-40 other Chinese companies, including mobile screen and battery manufacturers. Chinese investments and business activities in India have been subjected to strict scrutiny. The Indian government has taken several steps to ensure transparency and accountability in transactions involving Chinese companies, especially in sectors such as technology, infrastructure and finance.