• Rashi Srivastava

Section 36 and Section 37 - The Companies Act 2013

Updated: Mar 16

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Section 36 Punishment for fraudulently inducing persons to invest money - Indian Companies Act 2013




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Punishment for fraudulently inducing persons to invest money



Section 36 of the Indian Companies Act 2013 states that any person responsible for fraudulently inducing anyone to invest money is punishable under section 447 of the Act. A provision in the Companies Act 2013 related to punishment for fraudulently inducing persons to invest money is as under.


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.


SECTION 37 - Action by affected persons


A suit may be filed, or any other action may be taken under section 34 or section 35 or section 36 by any person, group of persons, or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus.


This Section of Companies Act deals with the actions one can take after finding misstatements in the prospectus or after getting dodged by the Company's misleading prospectus. This Section gives you/us the right to sue the Company and take it to the tribunal if we got cheated or misled by the Company.




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