Section 40 Securities to be dealt
with stock Exchanges - Indian Companies Act 2013
As per Section 40 of
Act 2013 every company making public offer shall dealt with the securities
through stock exchange. Provision in the Companies Act 2013 related to
Securities to be dealt with Stock Exchanges is as under.
(1) Every company
making public offer shall, before making such offer, make an application to one
or more recognised stock exchange or exchanges and obtain permission for the
securities to be dealt with in such stock exchange or exchanges.
(2) Where a prospectus states that an application under sub-section (1) has been
made, such prospectus shall also state the name or names of the stock exchange
in which the securities shall be dealt with.
(3) All monies received on application from the public for subscription to the
securities shall be kept in a separate bank account in a scheduled bank and
shall not be utilised for any purpose other than
(a) for adjustment against allotment of securities where the securities have
been permitted to be dealt with in the stock exchange or stock exchanges
specified in the prospectus; or
(b) for the repayment of monies within the time specified by the Securities and
Exchange Board, received from applicants in pursuance of the prospectus, where
company is for any other reason unable to allot securities.
(4) Any condition purporting to require or bind any applicant for securities to
waive compliance with any of the requirements of this section shall be void.
(5) If a default is made in complying with the provisions of this section, the
company shall be punishable with a fine which shall not be less than five lakh
rupees but which may extend to fifty lakh rupees and every officer of the
company who is in default shall be punishable with imprisonment for a term which
may extend to one year or with fine which shall not be less than fifty thousand
rupees but which may extend to three lakh rupees, or with both.
(6) A company may pay commission to any person in connection with the
subscription to its securities subject to such conditions as may be prescribed.