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What is the purpose of imposing restrictions on securities under Section 222 of the Companies Act?
  • a)
    To prevent shareholders from selling their shares
  • b)
    To increase the value of the securities
  • c)
    To ensure accurate reporting of financial statements
  • d)
    To facilitate investigation into relevant facts
Correct answer is option 'D'. Can you explain this answer?
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What is the purpose of imposing restrictions on securities under Secti...
Purpose of Imposing Restrictions on Securities under Section 222 of the Companies Act:

- To Facilitate Investigation into Relevant Facts:
- The main purpose of imposing restrictions on securities under Section 222 of the Companies Act is to facilitate the investigation into relevant facts.
- By restricting the transfer of securities, the authorities can prevent any potential tampering or manipulation of crucial evidence that may be needed for an investigation.

- Prevent Shareholders from Selling Their Shares:
- While this may be a side effect of imposing restrictions on securities, the main aim is not to prevent shareholders from selling their shares altogether.
- Instead, the focus is on ensuring that transactions involving securities are scrutinized in cases where an investigation is necessary.

- Increase the Value of the Securities:
- Imposing restrictions on securities under Section 222 of the Companies Act may not necessarily lead to an increase in the value of the securities.
- The primary objective is to maintain the integrity of the securities market and protect the interests of stakeholders.

- Ensure Accurate Reporting of Financial Statements:
- While accurate reporting of financial statements is essential, the restrictions on securities under Section 222 are more focused on investigating potential wrongdoing or irregularities within the company.
- This can help in ensuring transparency and accountability in the financial reporting process.

In conclusion, the ultimate purpose of imposing restrictions on securities under Section 222 of the Companies Act is to facilitate investigations into relevant facts and maintain the integrity of the securities market. It is important for upholding corporate governance standards and protecting the interests of investors and stakeholders.
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What is the purpose of imposing restrictions on securities under Secti...
Section 222 allows the Tribunal to impose restrictions on securities when it's necessary to find out relevant facts about securities issued by a company. These restrictions are meant to facilitate investigations into the company's affairs.
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What is the purpose of imposing restrictions on securities under Section 222 of the Companies Act?a)To prevent shareholders from selling their sharesb)To increase the value of the securitiesc)To ensure accurate reporting of financial statementsd)To facilitate investigation into relevant factsCorrect answer is option 'D'. Can you explain this answer?
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