Section 36 of the Companies Act, 2013
Section 36 of the Companies Act, 2013 is titled:
"Punishment for fraudulently inducing persons to invest money"
🔹 Bare Act Text (Simplified):
If any person fraudulently or knowingly induces another person to:
Invest money,
Subscribe for securities of a company, or
Enter into any agreement with a view to obtaining investment,
by making false, deceptive, or misleading statements in any:
Prospectus,
Statement,
Advertisement, or
Any other document,
👉 then such person shall be punishable.
🔹 Punishment under Section 36:
Imprisonment: Up to 10 years (minimum 6 months)
Fine: Which may extend to 3 times the amount involved in the fraud
🔹 Key Takeaways in Simple Words:
If someone lies or misleads people to invest in a company, they can be punished for fraud.
This includes false promises or fake documents to get investment.
The law ensures investor protection from fraudulent activities.
🔹 Example:
If a company director publishes a false prospectus showing fake profits to get public investments, he can be jailed and fined under Section 36.
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