Companies Act Section 36 — Punishment for fraudulently inducing persons to invest money

CHAPTER III PROSPECTUS AND ALLOTMENT OF SECURITIES

Commercial / Corporate

Summary

Any person who knowingly or recklessly makes a false, deceptive, or misleading statement, promise, or forecast, or who deliberately hides any important facts, in order to persuade someone else to enter into or offer to enter into certain types of agreements, will face action under section 447.

Under clause (a), this covers any agreement for, or with a view to, buying, selling, subscribing for, or underwriting securities.

Under clause (b), this covers any agreement whose purpose, or pretended purpose, is to secure a profit for any party from the yield of securities or from changes in the value of securities.

Under clause (c), this covers any agreement for, or with a view to, obtaining credit facilities from any bank or financial institution.

Official Text

Any person who, either knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading, or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter into,—

(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting securities; or

(b) any agreement, the purpose or the pretended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities; or

(c) any agreement for, or with a view to obtaining credit facilities from any bank or financial institution, shall be liable for action under section 447.