404. Fraudulently inducing persons to invest money

Question 1

404. Fraudulently inducing persons to invest money

Conspiracy

Obtaining payment of moneys, etc., to company by false promise of officer or agent of company

Evidence of financial position of company

Answer 1

General overview
[404.01] Section 404(3) renders an officer or agent of any corporation, by any deceitful means or false promise and with intent to defraud, who causes or procures any money to be paid or any chattel or marketable security to be paid or delivered to that corporation, or to himself or any person for the use and benefit of that corporation, guilty of an offence. The penalty on conviction is a fine not exceeding $15,000 or to imprisonment not exceeding five years or both.

Question 2

False statements in prospectus or statement in lieu of prospectus

Answer 2

[404.02] The requirement of a prospectus for the issue of shares and other marketable securities to the public under ss 43–56 have been repealed. This area of the law as regards false or untrue statements in the prospectus is governed by ss 253, 254 and 255 of the Securities and Futures Act (Cap 289). Further, see s 60(3) in respect of false or untrue statements or wilful non-disclosure in statements in lieu of prospectus in the context of an allotment of shares in a public company.

Question 3

False representations in loan documentation

Answer 3

[404.03] A false representation in the documentation to obtain a loan and under which the financier disbursed money to the borrower for the benefit of the company would be caught by this section: Lai Jan Far v PP MA 246/1995.

Question 4

Deceitful means or false promise

Answer 4

[404.04] Similarly, where the accused falsely represented to various persons that he would invest $30,000 into the company but failed to do so in order to induce them to invest $30,000 each in a company of which he was a director, he was guilty of an offence under s 404(3)

Question 5

“intent to defraud”

Answer 5

[404.05] The element of “intent to defraud” does not include an intention to cause a loss. So long as there is a false promise or the procuring of something to be done by deceitful means is sufficient for an offence under s 404(3).