New Delhi: The ministry of corporate affairs (MCA) has directed the Registrar of Companies (RoC), Delhi, to investigate Speak Asia Online, according to a senior MCA official who did not want to be identified.
D.K. Mittal, secretary, MCA, confirmed that an investigation has been initiated, though the company denied it had received any communication to that effect.
The company says its uses the collective bargaining power of 1.9 million online consumers to “get unprecedented price advantages” in purchasing goods and services. It has been under the scrutiny of various regulators for alleged misdemeanours.
Since the company was not registered in India, there were jurisdictional issues, which have now been resolved, facilitating the launch of investigations.
“Since Speak Asia is not registered in India, an inquiry under section 591 of the Companies Act, 1956, which deals with companies not registered in India, has been ordered and accordingly the RoC will investigate,” said the MCA official mentioned earlier.
The official added that RoC Delhi’s investigation will be assisted by the deputy RoC, Mumbai.
“RoC Delhi will look into aspects such as management of the company, why has it not registered with MCA so far, what are its investments, how is it conducting its business, where is the money coming from, how is it paying it members, etc.,” said this official. RoC will get a maximum of three months’ time to furnish its report, he said.
After RoC submits its report, the ministry will take a call on the action to be taken, which may involve imposing penalties and initiating criminal proceedings, depending on the extent of wrongdoing by the company, if any.
“We are surprised. We have no information about such an investigation. No notice or letter has been received by the company,” Manoj Kumar, chief executive officer (India) at Speak Asia Online, said in a mobile phone text message.
Kumar said in another SMS that the company will respond immediately to MCA if a notice is sent.
A detailed email sent to him remained unanswered.
Speak Asia, which has been operating in India since 2010, earned revenue of $80.5 million (around Rs 360 crore today) in the last three quarters, according to a company presentation last month.
The company is closely being watched by other agencies such as the Reserve Bank of India (RBI), market regulator Securities and Exchange Board of India and the income-tax department, besides MCA. However, because of jurisdiction issues and the nature of the company’s operations, they haven’t started investigations.
MCA had said in June that it couldn’t do much since Speak Asia wasn’t registered in India. That view appears to have changed.
“Under section 591, MCA can investigate a company incorporated outside, but has established business in India and is represented by an Indian citizen or company,” said the MCA official cited above.
In June, Kumar had said three different companies were about to be registered with RoC Mumbai.
“One will be a content company, Speak Asia India will be another one, and a third one may be called Precision Marketing,” Kumar had said on the sidelines of a press briefing in New Delhi.
He didn’t reply to a text message asking why the registration hadn’t taken place.
There is confusion over what Speak Asia does, although Kumar says it is a referral marketing company. Panellists (consumers) earn reward points for referring products sold by Speak Asia to their peers or friends.
Consumer activists have been persuaded to take note of the company because of the seeming lack of clarity and a slick advertising campaign.
“I can’t understand how on earth a company can pay a return of 10% per week to its members,” said Kirit Somaiya, president of the Investors’ Grievances Forum in Mumbai. Somaiya filed a complaint in May with the economic offences wing of the Mumbai Police against Speak Asia, saying he had received several complaints from consumers across the country.
“We have been approaching different agencies, including finance minister Pranab Mukherjee, to take action against Speak Asia and other collective investment companies,” he said.
According to a press release issued by the company last month, 1.2 million customers in India have received more than $52 million since last year through bank transfers via RBI-authorized foreign exchange channels.
This income has been generated by filling up surveys, giving online opinions on advertisements watched and income accrued from referring other panellists. The firm has, to date, since its entry into India, invested more than $9 million in various marketing, training and business development programmes, it said.