Companies Act Section 38 — Punishment for personation for acquisition, etc., of securities
CHAPTER III PROSPECTUS AND ALLOTMENT OF SECURITIES
Commercial / Corporate
Summary
Sub-section (1) lists three types of conduct that are punishable. Under clause (a), it is an offence to make, or help someone else make, an application to a company in a fake name to buy or subscribe for its securities. Under clause (b), it is an offence to make, or help someone else make, multiple applications to a company using different names or different combinations of your own name and surname to buy or subscribe for its securities. Under clause (c), it is an offence to otherwise directly or indirectly get a company to allot securities to you, or to register a transfer of securities to you or to anyone else, in a fake name. A person who does any of these things is liable for action under section 447.
Sub-section (2) requires that the contents of sub-section (1) be clearly printed in every prospectus issued by a company and in every application form for securities.
Sub-section (3) says that if a person is convicted under this section, the Court may also order that person to give up any gain they made, and may order the seizure and disposal of any securities in that person's possession.
Sub-section (4) states that any money received from the disgorgement of gains or the disposal of securities under sub-section (3) must be credited to the Investor Education and Protection Fund.
Official Text
(1) Any person who—
(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
(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.
(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.
(4) The amount received through disgorgement or disposal of securities under sub-section (3) shall be credited to the Investor Education and Protection Fund.