Section 38: Punishment for personation for acquisition, etc., of securities
This section is for punishing people who try to acquire securities by making fake applications or using multiple names.
The section, clause by clause
What the section says
In plain terms
(1)Any person who—
A person who makes or helps make fake applications to a company to acquire its securities, or makes multiple applications in different names, is liable for action.
(1)(a)makes or abets making of an application in a fictitious name to a company for acquiring, or subscribing for, its securities; or (b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or
(1)(c)otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to him, or to any other person in a fictitious name, shall be liable for action under section 447.
(2)The provisions of sub-section (1) shall be prominently reproduced in every prospectus issued by a company and in every form of application for securities.
Companies must include a warning about the rules in every prospectus and application form for securities.
(3)Where a person has been convicted under this section, the Court may also order disgorgement of gain, if any, made by, and seizure and disposal of the securities in possession of, such person.
If someone is convicted under this rule, the Court can order them to give up any gains and seize the securities they have.
(4)The amount received through disgorgement or disposal of securities under sub-section (3) shall be credited to the Investor Education and Protection Fund.
The money from seized securities will be credited to the Investor Education and Protection Fund.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Ins. by Act 1 of 2018, s. 9 (w.e.f. 9-2-2018).
- 2. Subs. by Act 22 of 2019, s. 8, for “delivery of a copy of the prospectus for registration” (w.e.f. 15-8-2019).
This section refers to
Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.