MCA Targets 400 Chinese Companies For Deregistration Over Next 3 Months: Report

The MCA has been examining loan apps operating in the country, specifically targeting those involved in predatory lending practices, fraud, or violations of financial regulations.

The Ministry of Corporate Affairs is reportedly planning to deregister up to 400 Chinese companies across 17 states within the next three months due to incorporation and financial fraud issues. According to a government official, more than 700 Chinese companies are currently under investigation by the MCA, reported Moneycontrol on Saturday.

When a company is struck off, it is removed from the official Registrar of Companies (RoC) and loses its legal status as a valid business entity.

“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.

The MCA has been examining loan apps operating in the country, specifically targeting those involved in predatory lending practices, fraud, or violations of financial regulations. Recently, there has been increasing concern about the rise of digital lending apps in India, many of which are connected to Chinese companies. These apps have faced allegations of using aggressive tactics, imposing excessive interest rates, and engaging in unethical behaviours, including harassing borrowers.

“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, business closing typically takes three months. Initially, a notice is sent to the company, allowing time for a response. If no reply is received within a month, a second notice will be issued. Failure to respond to this second notice will result in the company being 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 added.

Further investigation has been ordered for 30-40 additional Chinese companies, including those in mobile screens and batteries, based on initial findings. If the inquiry report justifies it, action will be taken; otherwise, the remaining companies will be further examined.

There is increased scrutiny of Chinese investments and business activities in India, with the government implementing measures to ensure transparency and accountability, especially in sensitive sectors like technology, infrastructure, and finance.