Company Verification

Fake Company Warning Signs - What to Check Before You Pay

Shell vendors and paper companies still show up on purchase orders. These are the MCA and GST signals we see most often when a counterparty isn't what the invoice claims.

Fake company fraud in India usually isn't elaborate - it's a registered entity with Rs 1 lakh capital, no filings for three years, and an invoice for goods that never arrive. The company may have been real once. By the time you discover the scam, MCA has already started strike-off proceedings and your advance payment is gone.

Strike-off and dormant status

Check the company's MCA status first. "Under process of striking off" or "Strike off" means the entity is being removed from the register - often for not filing returns. If someone is invoicing you from a company heading for strike-off, that's not a grey area.

"Active" status with zero filings for two or more years is almost as bad. MCA allows strike-off for companies that don't file AOC-4 and MGT-7 - and many shell companies simply stop filing once they've served their purpose.

Missing or stale annual filings

Pull filing history on MCA master data. If the latest AOC-4 is three years old while the company claims current operations, something doesn't add up. Compare against the annual filing calendar - a March year-end company should have filings through the prior year at minimum.

  • No AOC-4 for two or more consecutive years
  • MGT-7 missing while AOC-4 exists (partial compliance is still a signal)
  • Director DINs deactivated for missed DIR-3 KYC
  • Registered office at a mass virtual address with dozens of companies listed

Identity and document mismatches

CIN on the invoice doesn't match MCA? Stop. GSTIN legal name differs from MCA company name with no plausible trade name explanation? Flag it. Bank account in a third person's name? We've seen that movie before.

Pattern we see often. Company incorporated recently, paid-up capital at minimum, no website or a copy-paste template site, and directors who sit on fifteen other companies at the same address. Individually each signal is weak; together they're a pattern worth walking away from.

Operational red flags beyond MCA

Pressure to pay before verification completes. Refusal to share GSTIN or PAN. Invoice amounts just below your approval threshold, repeated. No physical presence when the deal requires one. These aren't MCA data points - but they correlate heavily with entities that fail MCA profile checks.

Run the full vendor due diligence checklist before releasing any advance. Two minutes on MCA and the GST portal beats two months in recovery litigation.

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Common questions

Can a struck-off company still operate?

Legally, no. Once struck off, the company ceases to exist. Any invoice after strike-off date is from a non-existent entity.

Is a company with Rs 1 lakh capital always fake?

No. Many legitimate small companies start at minimum capital. But large claimed turnover with tiny capital deserves scrutiny.

How do I check if a company is real in 2 minutes?

Verify CIN on MCA master data - confirm Active status, recent filings, and director names match your contact.

What if the company was real but is now defunct?

Check status and filing gap. Fraudsters sometimes reuse names of old companies or operate under similar-sounding names.

Can I recover money from a fake company?

Recovery is hard once strike-off happens. Prevention through KYC at onboarding is far cheaper than litigation.