MEANING
Section 447 of the company act defines fraud as follows:
Fraud concerning affairs of a company or anybody corporate include
- Any act,
- Omission
- Concealment of any factor
- Abuse of position
Committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether there is any wrongful gain or wrongful loss.
HOW IT IS DIFFERENT FROM COMPANIES ACT 1956?
Under the Companies Act, 1956 there was no one unified section that dealt with fraud or prescription of penalties. However, the Companies Act, 2013 overcame the same. It specifically defines fraud under section 447 of the act and the same is referred to in various places in the Act. For example, If the promoters have wrongfully published any information under section 34 of the Act, they will be held guilty for fraud under section 447. By specifying punishment in one section and making its reference in other sections of the act, the act tries to ensure more unity.
USE OF SECTION 447 UNDER VARIOUS OTHER SECTIONS OF THE ACT
Company Act, 2013 defines fraud under section 447 and the same is referred under various other sections of the Act.
| S. No. | Section | Nature of Violation |
| 1. | 7 | Incorporation of company |
| 2 | 8 | Charitable companies |
| 3 | 34 | Criminal liability for misstatement in prospectus |
| 4 | 36 | Punishment for fraudulently inducing persons to invest money |
| 5 | 38 | Punishment for personation for acquisition etc of securities. |
| 6 | 46 | Certificate of shares |
| 7 | 56 | Transfer and transmission of securities |
| 8 | 66 | Reduction of share capital |
| 9 | 75 | Damage for fraud |
| 10 | 76A | Punishment for contravention of section 73 or section 76 |
| 11 | 86 | Punishment for wilfully furnishing any false or incorrect information |
| 12 | 90 | Register of Significant beneficial owners in a company |
| 13 | 140 | Removal, the resignation of auditors, and giving of special notice. |
| 14 | 206 | Power to call for information, inspect books and conduct inquiries |
| 15 | 212 | Investigation into affairs of company by Serious Fraud Investigation Office |
| 16 | 213 | Investigation into the company’s affairs in other cases |
| 17 | 229 | Penalty for furnishing false statement, mutilation, destruction of documents |
| 18 | 251 | Fraudulent application for removal of name |
| 19 | 339 | Liability for fraudulent conduct of business |
| 20 | 448 | Punishment for false statement |
INGREDIENT OF FRAUD
- INTENTION TO COMMIT FRAUD
- UNLAWFUL GAIN OR LOSS
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Posted by:
CS Neetu Saini
AKGVG & Associates