ICAI slaps over 200 CAs for aiding Chinese firms to violate Companies Act, 2013

ICAI slaps over 200 CAs for aiding Chinese firms to violate Companies Act, 2013

More than 200 chartered accounts have received disciplinary notices issued by the CA Institute for their alleged role in aiding several Chinese firms violate the Companies Act 2013, through their India-incorporated subsidiaries and shell companies in recent years.

It is learnt that the action has been initiated based on a list of 400 professionals (both CAs and Company Secretaries) sent by the government to the ICAI and Company Secretaries Institute.

The ICAI had, in June this year, said hundreds of CAs across the country were under the CA Institute's disciplinary lens.

In recent years, the Centre, has tightened its foreign direct investment (FDI) regime on investments coming from countries that share land border with India. The apparent effort was to curb Chinese investments in Indian companies. The Foreign Direct Policy was tweaked in April 2020, making it mandatory to seek the Centre's nod for investments coming from such neighbouring countries. Additionally, the Corporate Affairs Ministry (MCA) in June had stipulated that citizens of those countries should obtains Home Ministry's clearance if they were to be appointed directors of Indian companies.

The MCA had also recently made rule changes, requiring the furnishing of the Foreign Exchange Management Act (FEMA) compliance declaration at the time of incorporation of companies involving investments from land-border-sharing countries.