Section 37 of the Companies Act, 2013
Section 37 of the Companies Act, 2013 — "Action by affected persons."
📜 Text Summary of Section 37:
Section 37 provides protection to investors by allowing them to take legal action if they are misled or defrauded during the process of public offer of securities.
✅ Key Provisions:
Who Can Act?
Any person (investor or applicant) who has subscribed to securities of a company:
Based on a prospectus, and
Has suffered loss or damage as a result of any misstatement or omission in the prospectus.
Against Whom?
Action can be taken against:
Company
Directors
Promoters
Or any person responsible for issuing the misleading prospectus.
What Kind of Action?
The affected person can:
File a suit or
Take any other prescribed action for compensation.
Relation with SEBI:
This applies in addition to the rights under SEBI regulations.
💡 Purpose:
To ensure transparency and accountability in public offerings.
To protect investors from fraudulent or misleading statements in prospectuses.
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