MCA asks greater disclosures from firms eying India

Government sources have indicated that the MCA has written to the FIPB on possible violations of FDI norms by foreign companies, reports Ronojoy Banerjee of CNBC-TV18.

An opinion from the MCA is sought when a matter is about to be put up before the FIPB for approval. It is known that in the recent past many matters had come up to the MCA where the FIPB have specifically asked them to check if there are any Company Law violations.

The MCA has now written to the FIPB that they feel that in many instances a joint venture agreement between an Indian and a foreign partner, especially in the restricted sectors, could have some private opaque inter-se agreement between them, which could bypass the FDI laws, which is worrying the MCA.

They feel that at the time these matters come to FIPB for approval, these companies or should also be threadbare what are those private arrangements and agreements so that FIPB is in the loop.

MCA is also concerned that FIPB is a one-time approval and what happens following the approval if through these inter-se agreements, the shareholding pattern and exactly who controls charge of the company. The MCA feels that there should be simultaneous or periodic checks of such approvals.

MCA also at this point in time is probing the Bharti-Wal-Mart case. So, we need to wait and watch how the FIPB takes this seriously or not. (Moneycontrol)