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The Ministry of Corporate Affairs (MCA) has asked the Institute of Chartered Accountants of India (ICAI) and Institute of Company Secretaries of India to look into instances where action against their members may be merited. This is in regard to incorporation frauds in about 500 Chinese companies that are currently under probe for incorporation frauds, a government official said.
“Over 500 Chinese companies are under the scanner for incorporation-related frauds. During incorporation of a company, certification is needed from company secretaries and CAs. Disciplinary proceedings are likely against the company secretaries and chartered accountants who falsely certified these companies,” the official told Moneycontrol.
The Companies Act, 2013, requires that before certifying, the CAs and company secretaries concerned need to make on-spot checks to see if the company is functioning as mentioned in the documents. The MCA has found that many of these companies are non-existent at their registered addresses. Some had received investments but were now into businesses that were not part of their stated intent. These are incorporation-related frauds, he added.
“MCA has referred to ICAI and Institute of Company Secretaries of India for disciplinary proceedings against their members, including penalty and suspension. Cases may be registered against them,” he said.
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 such companies, particularly in sensitive sectors such as technology, infrastructure and finance.
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