Section 38 of the Companies Act, 2013
Section 38 of the Companies Act, 2013 deals with punishment for personation (impersonation) for acquisition of securities.
📘 Section 38 – Punishment for Personation for Acquisition, etc., of Securities
(1) If any person:
Makes an application to a company in a fictitious name, or
Uses a false or fictitious identity for acquiring, subscribing to, or applying for any securities of the company, or
Induces a company to allot or register securities in a false name,
👉 That person shall be held liable for fraud under Section 447.
(2) The company shall inform the Registrar about such fraud and file a return as prescribed.
(3) Any person found guilty may be prosecuted under provisions of the Indian Penal Code as well (specifically Sections related to fraud, cheating, forgery, etc.).
✅ Punishment (under Section 447 of Companies Act):
Imprisonment: Minimum 6 months, which may extend to 10 years.
Fine: Not less than the amount involved in the fraud, and may extend to 3 times the amount.
If public interest is involved, minimum imprisonment is 3 years.
⚠️ Example:
If a person applies for shares using a fake identity to corner shares during an IPO — that is personation. Such a person will be punished for fraud.
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