Section 326 of the Companies Act, 2013
Section 326 of the Companies Act, 2013 deals with the penalty for false statements in prospectus or related documents.
🔹 Section 326 – Punishment for False Statement in Prospectus
✅ Key Provisions:
📌 1. Offense:
If any person makes a statement in a prospectus (or in any document required by law to be attached or annexed to a prospectus) which:
Is false in any material particular,
Is made knowingly or willfully,
then such person is liable under this section.
📌 2. Punishment:
The person shall be punishable with:
Imprisonment for a term which may extend to 5 years, and/or
A fine which may extend to ₹10,00,000.
📌 Objective:
To deter fraud and protect investors by ensuring truthfulness and accuracy in information provided through prospectuses.
⚠️ Notes:
This section is stricter than Section 282 (which deals with false statements in returns and reports), reflecting the importance of prospectus disclosures.
Applies primarily to companies raising capital from the public.
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