Taking strict action against an Indian company hiding beneficial ownership links with a Chinese group, the Registrar of Companies (RoC) has imposed penalties exceeding Rs 21 lakh on Metec Electronics Pvt Ltd and related individuals and entities. The RoC, under the corporate affairs ministry, has ordered the Indian company not to enter into new agreements with entities of China's Metec Group in China and Hong Kong.
Metec Electronics Pvt Ltd had presented itself as an independent entity with shareholdings held by foreign nationals Chen Feiyan and Yang Wen, alongside an Indian national. The company denied any association with China's Metec Group, insisting the relationship was limited to purchasing goods. However, the RoC found evidence that the company was operating as a group company of China's Metec Group.
Under Section 89 of the Companies Act related to the declaration of beneficial interest in shares, the RoC has levied penalties totaling Rs 10,21,600 on China's Metec Electronics and individuals Chen Feiyan, Yang Wen, and Vikash Bhardwaj. Each has to pay a penalty of Rs 2,55,400. Additionally, fines amounting to Rs 11,16,200 were imposed for violating Section 90, which pertains to the requirement for an individual to declare significant beneficial ownership.
The penalties include Rs 5 lakh on Metec Electronics Pvt Ltd, Rs 3 lakh on Jiangping Hu, and Rs 1 lakh on Vikash Bhardwaj. Jiangping Hu is the significant beneficial owner of Metec Electronics Pvt Ltd. Former directors of the company, Vikash Bhardwaj, Subodh Kumar, and Mohd Rafeek Saifi, face fines of Rs 1 lakh, Rs 83,400, and Rs 32,800, respectively.
Metec Electronics Pvt Ltd, engaged in assembling/manufacturing sound bars after procuring goods from China, is barred by the RoC from entering into new agreements with entities of the Metec Group in China/Hong Kong. The company cannot make payments to these entities, except for goods already received or in transit, until it declares the names of the registered and beneficial owners of the shares.
The RoC's investigation revealed the company's links to the Chinese group through details obtained from trademark applications and financial statements. The Indian company applied for trademarks identical to those sought by the Chinese companies of the group. Disclosures to Indian trademark authorities showed that Metec Electronics Pvt Ltd was using the trademark of Meisen in China.
Moreover, the registry information of Chinese companies indicated that foreign nationals employed by Metec in India held significant positions in the Chinese companies. Financial statements of the Indian company revealed the Metec group of companies in China as entities under common control, with the sole foreign director linked to the Chinese group. This action is part of the government's efforts to address alleged wrongdoings by various Chinese entities in recent years.
(With Agency Inputs)
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