MoCA Identifies 78 Dubious Companies, Takes Measures To Prevent Duping of Investors


In the year 2014, 74 companies were identified as ‘vanishing companies’ after they raised funds through public issue and failed to file the information with the regulators. The companies have also become untraceable.

“A total of 238 companies which had raised funds through Public issues were initially identified as Vanishing Companies as they had stopped filing documents, balance sheets with the regulators and were untraceable,” said Corporate Affairs Minister Arun Jaitley in a reply to a question raised in Rajya Sabha.

He further added, “Thus, as on date, there are 78 companies which remain in the list of “Vanishing Companies”. The total amount of Public Issues made by these 78 companies was nearly Rs 310.21 crore.”

Out of the 238 companies, while 78 continue to remain in the vanishing companies category, 128 companies have been listed under ‘Watch List’ segment. These companies have recently started updating the market watchdogs. At present, another 32 companies are under liquidation.

It is worth noting, that people who had invested in these 78 companies, have filed FIRs against them in order to track the promoters and the Board directors of these companies. “Prosecutions have also been filed against these companies and their Promoters/Directors under sections 162 and 220 of the Companies Act, 1956 for non-filing of Statutory Returns and under sections 62/63, 68 and 628 of the Companies Act, 1956 for mis-statement in Prospectus/fraudulently inducing persons to invest money/false statements made in the offer documents among others,” stated Union Minister Jaitley.

The Corporate Affairs Minister also apprised the Upper House that the government has taken several measures to prevent such fraudulent companies from duping innocent investors. The government has made it compulsory for both existing and upcoming directors of a company to get a “Director Identification Number” (DIN). In order to obtain DIN, the director will have to provide all his details such as his identity proofs and photographs.

Apart from a DIN, the government has made it mandatory for the government officials to visit the premise of a company that has been recently incorporated or has had a change of address. The promoters or the directors of the company will have to submit a proof of registered address of their firm.

“Instructions have also been issued to the Registrar of Companies to scrutinize the Balance Sheet and other records of the company who raise money through public issue and monitor the utilization of such funds. The Ministry has also undertaken preemptive measures aimed at sensitizing people through investors’ awareness programmes,” asserted Corporate Affairs Minister Jaitley.
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