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Punishment for fraud under Companies Act

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Punishment for fraud under Companies Act, Section 447 deals with the provision related to punishment for fraud. It says: ‘Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than 6 months but which may extend to 10 years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to 3 times the amount involved in the fraud, where the fraud in question involves public interest, the term of imprisonment shall not be less than 3 years. Now check more details about “Punishment for fraud under Companies Act” from below…

Punishment for fraud under Companies Act

Punishment for fraud under Companies Act

Different sections of the Act provide punishment for fraud. These are 7(5), 7(6), 8(11), 34, 36, 38(1), 46(5), 56(7), 66(10), 75, 140(5), 206(4), 213, 229, 251(1), 266(1), 339(3), 448, and others. These sections provide punishment for directors, key managerial personnel (KMP), auditors and/or officers of company. Thus, the new Act goes beyond professional liability for fraud and extends to personal liability if a company contravenes such provisions

Penalties for corporate frauds under the Companies Act

Section Fraud (with respect to) Who will be penalised
7(5) Company registration A person furnishing false information or suppressing any material information of which he/she is aware
36 Inducing persons to invest money The person involved
75(1) Acceptance of deposit with intent to defraud depositors or for any fraudulent purpose Every officer of the company who accepted the deposit
206(4) Conducting business of a company for a fraudulent or unlawful purpose Every officer of the company who has defaulted.
213 Business of a company being conducted with an intent to defraud its creditors; fraud, misfeasance or other misconduct of the company or any of its members; company withholding information from members with respect to its affairs, which they may reasonably expect Every officer of the company who is in default and the person(s) concerned in the formation of the company or management of its affairs
229 Furnishing false statement, or mutilation, or destruction of documents Person required to explain, or make a statement during the course of inspection, inquiry or investigation, or the officer or other employees, as required.
251(1) A Application for removal of name from the register to evade liabilities/intent to deceive Persons in charge of the management of the company
339(3) Conducting business of the company with an intent to defraud its creditors, any other persons, or for any fraudulent purpose Every person who was knowingly a party to the business in the aforesaid manner
448 Making a false statement in any return, report, certificate, financial statement, prospectus, statement or other document required by or for the purpose of any of the provisions of this Act or the rules made thereunder Person(s) making such a statement

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Article by Raju Choudhary Raju has written 537 articles. If you like This post, you can follow CAknowledge on Twitter. Subscribe to CAknowledge feed via RSS or EMAIL to receive instant updates.

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