Excerpt from Inc42 Article, Published on Aug 14, 2024.
The Ministry of Corporate Affairs (MCA) has initiated an investigation into Snapdeal over alleged regulatory violations and non-compliance with the Companies Act. This probe is part of a broader investigation into more than 700 companies suspected of receiving Chinese investments. The investigation was triggered by the Registrar of Companies (RoC) flagging certain irregularities in its report.
A spokesperson for Snapdeal’s parent company, AceVector, confirmed that they received a request for information from the MCA in May. AceVector has fully cooperated with the authorities and assured that there are no Chinese investors in Snapdeal. The MCA’s inquiry also extends to Snapdeal’s directors, Kunal Bahl and Rohit Kumar Bansal, seeking information about AceVector’s business operations, authorized share capital, and financial results.
Additionally, the ministry requested copies of board and shareholder meeting minutes from the past five years, statutory registers, secretarial records, financial statements, income tax returns, and assessment orders received by AceVector and its directors.
This development is concurrent with the Securities and Exchange Board of India (SEBI) reviewing AceVector’s red herring prospectus filed for its subsidiary, Unicommerce eSolutions Limited. Earlier reports indicated that the MCA plans to remove as many as 400 Chinese companies across 17 Indian states over the next three months, including those involved in loan apps, online job companies, and mobile component manufacturing.
The investigation into Snapdeal comes amidst rising concerns over digital lending apps in India, which have been scrutinized for predatory lending practices and financial regulation violations. Under Section 248 of the Companies Act, the closure of non-compliant businesses takes three months.
Snapdeal, founded in 2010 by Kunal Bahl and Rohit Bansal, saw its consolidated operating revenue decline 31% to INR 372 Cr in FY23, though it managed to reduce its net loss by 44.7% to INR 282.2 Cr. The company’s income from ancillary activities also saw a significant decline during this period.
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