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CS Executive · Capital Market and Securities Laws · Issue and Listing of Non-Convertible Securities

Before its public issue, Orion Credit Ltd's promoter circulates misleading statements to create false demand for securities proposed to be listed. Which provision of the SEBI Act, 1992 is directly contravened?

Section 12A of the SEBI Act, 1992 is contravened. It prohibits any person from using manipulative or deceptive devices or fraudulent acts in connection with the issue of securities listed or proposed to be listed. Section 11A merely empowers SEBI to regulate issue disclosures.

  1. ASection 11A, allowing SEBI to specify matters on issue of capital
  2. BSection 12A, prohibiting manipulative and deceptive devices in issue of securitiesCorrect
  3. CSection 23 of the Companies Act, on modes of issue
  4. DSection 33 of the Companies Act, on application forms

Explanation

Section 12A bars any person from using manipulative or deceptive devices, or acts operating as fraud, in connection with the issue of securities listed or proposed to be listed. Section 11A only empowers SEBI to regulate disclosures and prohibit prospectuses, so it is not the provision breached.

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