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Section40
The Companies Act, 2013

Securities to be dealt with in stock exchanges

In force From 01 Apr 2014 Act 18 of 2013 As on 14 Oct 2026

Act 18 of 2013 Ministry Corporate Affairs Enacted 29 Aug 2013 In force 01 Apr 2014 Cited by 1 provision Instruments 8

Section 40 of the Companies Act, 2013 deals with securities to be dealt with in stock exchanges. 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. The Act came into force on 01 Apr 2014.

(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 the 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 1*** or with fine which shall not be less than fifty thousand rupees but which may extend to 2 [three lakh rupees].

(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.

Section 40, The Companies Act, 2013 (Act 18 of 2013).

Cross-references

Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.

Referred to by 1

  1. s. 388 Provisions as to expert‘s consent and allotment

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

  1. Rishyashringa Jewellery Ltd. & Anr. v. The Stock Exchange, Bombay & Ors.

    Supreme Court of India 31 Oct 1995 Binding (Supreme Court) (1995) 6 SCC 714; AIR 1996 SC 480

    Court's Decision & Legal Precedent

    SC J.S. Verma & K. Venkataswami JJ, CA arising from SLP, Judgment order-1.pdf 1995-10-31 DATE VERIFIED. Interpreting Companies Act 1956 s.73(1A): where prospectus states applications to multiple recognised stock exchanges, allotment is void unless permission is granted by each/every such exchange within ten weeks of closing the subscription list—overruling the Allied International Products reading that permission by any one exchange suffices. Map as successor to Companies Act 2013 s.40 (securities to be dealt with in stock exchanges). Appeal dismissed.

    On this section: 1956 s.73(1A) multi-exchange listing/permission voidness rule maps to 2013 s.40 dealing of securities on stock exchanges; permission of every named exchange is mandatory.

    Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.

Made under this section, and citing it

8 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.

All subordinate legislation

Questions about Section 40

What have the courts held on Section 40 of the Companies Act?

Rishyashringa Jewellery Ltd. & Anr. v. The Stock Exchange, Bombay & Ors. (31 Oct 1995) is the leading judgment on this section among those set out below: 1956 s.73(1A) multi-exchange listing/permission voidness rule maps to 2013 s.40 dealing of securities on stock exchanges; permission of every named exchange is mandatory.

How do I find court cases under Section 40 of the Companies Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 40, section 40 Companies Act, section 40 of the Companies Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Rishyashringa Jewellery Ltd. & Anr. v. The Stock Exchange, Bombay & Ors. (31 Oct 1995).

What should I read with Section 40 of the Companies Act, and has it changed?

1 other provision in this corpus refers back to it. The rules and notifications made under it are where it actually bites, and there are 8: most recently G.S.R No. 37(E) Companies Prospectus and Allotment of Securities Amendment Rules 2023 dated 20.01.2023 (2023), then S.O. 1255(E)-Commencement Notification Dated 18th March 2021 (2021), and 6 more.

When did Section 40 of the Companies Act come into force?

Section 40 of the Companies Act, cited as Companies Act 40, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.

Other sections of this Act

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.