Sources reveal that the Ministry of Corporate Affairs (MCA) has initiated an investigation into Hero MotoCorp Limited for alleged corporate governance concerns, as per ET.

In a probe initiated under the premise of 'public interest,' the Ministry of Corporate Affairs (MCA) will examine the actual ownership of specific associated companies. Alongside Hero MotoCorp, the MCA will scrutinize the activities of Salt Experiences and Management Private Limited (SEMPL), suspected to be a connected entity of Hero MotoCorp, according to insider sources.

“There have been allegations of Hero MotoCorp allegedly floating shell companies. An inquiry by the Registrar of Companies has also concluded a need for a thorough investigation into the affairs of the company and linked entities. The same was examined by the government which has ordered an investigation into the affairs of Hero MotoCorp and SEMPL, in the public interest under sections 210 (1) (c) along with section 216 of the Companies Act,” added the person

According to sources, the investigation will delve into the findings of the income tax and Customs departments regarding the two companies in relation to corporate governance matters. It is worth noting that the Ministry of Corporate Affairs (MCA) possesses the authority to deregister a company if it is discovered to be a dormant entity or merely a shell corporation.

The statement had further claimed that the purchase of 10 acres of farmland in Delhi was facilitated through a series of companies, allegedly involving an "unaccounted" cash component exceeding Rs 60 crore.

Additionally, the statement indicated that expenses amounting to over INR 800 crore were recorded under the pretext of acquiring services from a specific event management entity.

Following the incident, the Customs department issued a show cause notice to Munjal, accusing him of being the beneficial owner of the foreign exchange involved in the attempted removal from the country by Amit Bali.

The department claimed that Bali, who was considered the central figure in the case, had purportedly carried forex exceeding the permissible limit on multiple prior occasions, consistently failing to declare it to customs.

In response to the matter, the spokesperson stated via email, "We have not been contacted regarding this issue and therefore cannot provide comments on the specifics of your inquiries. Should any regulatory authority request information from us, we will duly comply and furnish all necessary details." The statement further emphasized that Hero MotoCorp, recognized as the leading global producer of motorcycles and scooters, upholds responsible and law-abiding practices while adhering to the highest standards of governance.

Image source: The Economic Times