Section 23F of SCRA : Section 23F: Penalty For Excess Dematerialisation Or Delivery Of Unlisted Securities

Explanation using Example

Imagine a company, XYZ Corp, has issued 1 million shares. However, due to an error or fraudulent activity, XYZ Corp's registrar dematerializes 1.2 million shares, meaning there are 200,000 more shares in the electronic form than there should be. This over-issuance of dematerialized shares violates Section 23F of The Securities Contracts (Regulation) Act, 1956. As a result, XYZ Corp could face a penalty starting from five lakh rupees up to twenty-five crore rupees for this discrepancy.