Snapdeal investigation started : Connection being told with China, What exactly is the case?

According to information, the ministry initiated the inquiry after the Registrar of Companies (ROC) in its report revealed that there was a disturbance in the company. The ministry is investigating more than 700 companies that have received investment from Chinese companies. This is part of the same inquiry. Some of these companies are facing scrutiny from the Registrar of Companies on foundation basis. According to the official, the investigation may take six months.

According to the official, after the ROC had filed a preliminary investigation report after investigating Snapdeal, the Ministry of Corporate Affairs ordered a thorough investigation. It will investigate the investment in the company from China. AceVector Group's Snapdeal, founded in 2010, has been invested by Chinese companies. From 2015 to 2021, Alibaba had a three percent stake. the ministry had asked for the information in May 2024 and the company had provided it. There are no Chinese investors in Svector. Svector Limited was earlier known as Snapdeal Limited and its largest shareholder is Starfish Private Limited, a Softbank company. He has 35.4 percent holding of the company.

The Ministry through the Office of the Regional Director (North Region) had on May 13 issued a letter under Section 206(5) of the Companies Act, 2013 to the company, its directors Kunal Bahl and Rohit Kumar Bansal along with some key people in the management. It sought information about the company's business, authorized share capital and working results. Also, the ministry has asked for the details of the board and shareholders meeting for five years. Along with this, ITR, assessment, secretarial records have also been requested. On May 24, the company agreed to cooperate with the investigation. The case is still ongoing and SVector's promoted company Unicommerce e-Solutions had informed about this in its IPO draft. Shares of Unicommerce entered the domestic market on August 13.

This investigation by the MCA is being described as part of a larger investigation of about 700 companies that have received investments from Chinese companies. An official of Ace Vector Limited confirmed this development in a conversation with Business Standard.

The official said, 'AceVector Limited received a request for information from the MCA in May 2024. The company has submitted the necessary information and is committed to answer the upcoming questions as per the law and in accordance with administrative standards. There are no Chinese investors in AceVector Limited.'

The MCA has sought information related to AceVector's business, its authorized share capital and operations. According to reports, the Registrar of Companies (ROC) initiated the investigation after irregularities were found in the financial statements.

Snapdeal reported a consolidated loss after tax of Rs 282.2 crore in FY23, down from Rs 510 crore in the previous year. Meanwhile, the company's total income declined to Rs 388.1 crore from Rs 563.5 crore in the previous FY22. The company's software-as-a-service platform Unicommerce recently had an IPO.