Companies Act Section 222 — Imposition of restrictions upon securities

CHAPTER XIV INSPECTION, INQUIRY AND INVESTIGATION

Commercial / Corporate

Summary

Sub-section (1) allows the Tribunal to place restrictions on a company's securities if it believes, during an investigation under section 216 or based on a complaint, that such restrictions are necessary to uncover the true facts about those securities. The Tribunal can issue an order specifying the restrictions and the period they will apply, which cannot exceed three years.

Sub-section (2) states that if securities are issued, transferred, or acted upon in violation of a Tribunal order under sub-section (1), the company faces a fine of at least one lakh rupees and up to twenty-five lakh rupees. Additionally, every officer of the company who is in default may face imprisonment for up to six months, or a fine of at least twenty-five thousand rupees and up to five lakh rupees, or both.

Official Text

(1) Where it appears to the Tribunal, in connection with any investigation under section 216 or on a complaint made by any person in this behalf, that there is good reason to find out the relevant facts about any securities issued or to be issued by a company and the Tribunal is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order.

(2) Where securities in any company are issued or transferred or acted upon in contravention of an order of the Tribunal under sub-section (1), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.