What should an investor verify first?

The legal company name, CIN, security class and ISIN, checked through independent official records, not the seller's own material.

How does the structure affect the investor's outcome?

The seller's demat holding evidence must be reviewed through a properly controlled verification process, not taken on trust.

What is the main downside to test?

Screenshots and logos are trivially easy to fabricate and prove very little about a transaction's legitimacy.

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How to Check Whether Unlisted Shares Are Genuine

Q: How should the final decision be made?

Genuine ownership is necessary, but price, rights and a realistic exit path still determine whether the investment is sensible.

Janvi Bhalla1 min read

Understanding the Unlisted-Share Decision

Fraud risk in unlisted-share transactions sits at three distinct levels: the underlying company itself may be misrepresented, the specific security offered may be incorrect or fabricated, or the seller may simply not own what they claim to be offering. Genuine verification has to address all three separately — clearing one does not clear the others.

Reading the Transaction and Ownership Structure

Check the legal company name, its Corporate Identification Number (CIN), the specific security class and the exact ISIN independently, not from the seller's own material. Review the seller's demat holding evidence through a properly controlled verification process, and confirm the intermediary's actual identity, any conflicts of interest, and the commercial spread being charged.

Where the Expected Exit Can Break

Screenshots and company logos are trivially easy to fabricate and prove almost nothing on their own — genuine verification requires independent records, not visual materials supplied by the seller.

A genuine, properly owned share can still be sold to you at an entirely unjustifiable price, and firm assurances of a fixed IPO date or a guaranteed buyback are themselves reliable warning signs, since no legitimate party can actually guarantee either outcome.

Making the Investment Decision

Before acting, answer five questions in writing: use independent, official company records rather than material supplied by the seller; match the ISIN and attached rights precisely to what is actually being offered; avoid cash payments and any third-party bank accounts entirely; read the actual transfer restrictions in the company's articles; and document every representation made to you during the sales process, in writing.

Genuine ownership of the security is a necessary condition, but price, rights and a realistic exit path still determine whether the investment itself is actually sensible.

Key takeaways

Fraud risk sits at three levels — the company, the security, and the seller's ownership — verify all three separately.
Check the legal company name, CIN, security class and ISIN through independent, official records.
Screenshots and logos are trivially easy to fabricate and prove very little on their own.
Genuine ownership is necessary, but price, rights and exit still determine whether the investment is sensible.

More in Pre-IPO and Unlisted Shares

Continue with the other chapters in this module.

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