Walmart bought a majority stake in Flipkart for $16 billion in 2018. This is the biggest deal ever. Sachin Bansal sold his stake to Walmart at that time.
Confident of cooperation in investigation on ED’s notice
Walmart-owned Flipkart on Thursday said the company complies with Indian laws, including foreign direct investment (FDI) rules, and will cooperate with the Enforcement Directorate on notices sent for alleged violations of FEMA.
Official sources said on Thursday that the Enforcement Directorate (ED) has issued Rs 10,600 crore show cause notice to Flipkart and its promoters for alleged violation of the Foreign Exchange Act.
When contacted, Flipkart said that it complies with Indian laws and regulations, including FDI regulations. The e-commerce company said, “The authorities, as per their notice, will investigate this matter relating to the period 2009-2015 and we will cooperate with them in this. However, there was no immediate reaction from the founders of the company.
Notice issued to 10 people
According to sources, a total of 10 people, including Flipkart, its founder Sachin Bansal and Binny Bansal, were issued notices last month under various sections of the Foreign Exchange Management Act (FEMA).
There is an allegation of breaking these rules
Sources said the notice was issued after the completion of the investigation and the charges against the company include violation of Foreign Direct Investment (FDI) norms and regulating multi-brand retail. The Walmart-owned company and its executives will now face a judicial decision, he added. A special director-rank officer of the agency based in Chennai will conduct the proceedings.
Walmart buys major stake in Flipkart
Walmart bought a majority stake in Flipkart for $16 billion in 2018. This is the biggest deal ever. Sachin Bansal sold his stake to Walmart at that time, while Binny Bansal retained a small stake. After a $3.6 billion funding round in July, Flipkart’s valuation more than doubled to $37.6 billion in less than three years. During this, SoftBank re-invested in the company before its market debut. The notice is the new regulatory headache for the online retailer, which already faces tough sanctions and antitrust scrutiny in India and a growing number of complaints from small sellers.
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