# Punishment for Personation for Acquisition of Securities (Section 38)
## Purpose of the Section
The section aims to prevent allotment of shares in fictitious names. Personation in this context means applying for or acquiring securities under a false identity.
## Sub-section (1) - Acts Punishable
A person is liable for punishment under Section 447 (fraud) if he:
| Clause | Prohibited Act |
|---|---|
| (a) | Makes or abets the making of an application in a fictitious name to a company for acquiring or subscribing for its securities |
| (b) | Makes or abets the making of multiple applications in different names or different combinations of his name or surname for acquiring/subscribing securities |
| (c) | Otherwise induces directly or indirectly a company to allot or register transfer of any securities to him or any other person in a fictitious name |
## Sub-section (2) - Mandatory Disclosure
Every company which issues a prospectus is required to reproduce prominently the provisions of sub-section (1) in:
- The prospectus, AND
- Every form of application for securities
## Important Note - Liability Despite Fictitious Name
A person who gets shares allotted in a fictitious name becomes liable as a shareholder. Where a person carried on business under an assumed name and took shares in that name, his trustee in bankruptcy could not avoid liability.
## Sub-section (3) - Disgorgement
Where a person has been convicted under this section, the court may order:
- Disgorgement of any gain made by such person
- Seizure and disposal of securities found in his possession
## Sub-section (4) - Crediting to IEPF
The amount received through disgorgement or disposal of securities under sub-section (3) is to be credited to the Investor Education and Protection Fund (IEPF).