MCA Initiates Investigation into Hero MotoCorp
The Ministry of Corporate Affairs (MCA) in India has launched an investigation into Hero MotoCorp, a prominent motorcycle manufacturer, regarding alleged breaches of corporate governance norms and concerns over the beneficiaries of a connected entity. The probe, initiated under the premise of “public interest,” aims to delve into the ownership structure of certain linked companies and potential violations of corporate governance regulations influenced by the promoters.Salt Experiences and Management (SEMPL), a closely held company believed to be associated with Hero MotoCorp promoters, will also be scrutinized as part of the investigation. The decision to investigate comes after allegations of Hero MotoCorp’s involvement in establishing shell companies and subsequent findings from the Registrar of Companies calling for a comprehensive examination of the company’s affairs and its related entities. The government has invoked sections 210 (1) (c) and 216 of the Companies Act, which allow for investigations into the affairs and ownership of a company in the public interest. Hero MotoCorp has yet to receive any official communication regarding the investigation, but a spokesperson stated that the company would provide the requested information if approached by regulatory authorities. This investigation follows earlier incidents involving the income tax and customs departments, both of which discovered irregularities while dealing with corporate governance matters. The income tax department raided Hero MotoCorp in March 2022, uncovering alleged tax evasion and illegal business expenses. Furthermore, the customs department sent a show-cause notice to the Hero MotoCorp promoter group in connection with the discovery of undeclared foreign currency. The MCA’s investigation aims to address concerns about ownership, potential promoter involvement, and compliance with corporate governance norms in relation to SEMPL, while considering the findings of the income tax and customs departments.
