Punishment for personation for acquisition, etc., of securities
📚 Law Minded summary
This targets people who apply for securities under false identities, usually to grab more of an oversubscribed issue than their share.
Applying in a fictitious name, making multiple applications under different names or different combinations of names, or inducing a company to allot securities to a false identity, all attract the fraud punishment under section 447.
A court can also order the securities and any profit from them forfeited to the Investor Education and Protection Fund.
(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.
All sections in Chapter III — Prospectus and Allotment of Securities