Section 222 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 222 allows the Tribunal to put restrictions on securities issued or to be issued by a company, for up to three years, where the relevant facts about them cannot be found out without such restrictions. Sub-section (2) punishes issue, transfer or acting on securities in contravention of the order. The Corporate Laws (Amendment) Bill, 2026 proposes to omit that sub-section; the proposal is pending and is not law.
Where it appears to the Tribunal, in connection with an investigation under section 216 or on a complaint by any person, that there is good reason to find out the facts about securities and that this cannot be done without restrictions, it may order restrictions for a period not exceeding three years. Contravention is punishable with a company fine of one lakh to twenty-five lakh rupees, and, for officers in default, imprisonment up to six months or a fine of twenty-five thousand to five lakh rupees, or both. Bill 2026 clause 66 proposes to omit the penalty sub-section; it is not yet law.
The current law: sub-section (1)
The Tribunal may act where three things come together.
- The route. It appears to the Tribunal "in connection with any investigation under section 216 or on a complaint made by any person in this behalf".
- Good reason. There is "good reason to find out the relevant facts about any securities issued or to be issued by a company".
- Necessity. The Tribunal is "of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed".
Then the Tribunal "may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order".
Two observations on the text. First, the power covers securities "issued or to be issued", so it can reach both existing holdings and future allotments. Second, the section does not list the restrictions. It leaves them to what the Tribunal "may deem fit". In practice that could include limits on transfer, allotment or the exercise of rights attached to securities, but the order itself sets out what applies. Read the wording of the order, not just the section.
The link with section 216 is important. Section 216 is the ownership-tracing investigation, described in Section 216: Investigation of ownership of a company. The restriction is a support tool. It stops shares from changing hands or being issued while the inspector is still working out who the true owners are. The section also allows a complaint by "any person", so the route is not limited to a pending section 216 investigation.
If you are a shareholder or a company facing an application for restrictions, our legal dispute resolution team can help you examine the application and the order.
How it differs from section 221
| Section 221 | Section 222 | |
|---|---|---|
| Subject | Funds, assets and properties of the company | Securities issued or to be issued |
| Purpose | Stop prejudicial removal, transfer or disposal | Find out relevant facts about securities |
| Maximum period | Three years | Three years |
| Who can complain | Central Government reference, qualifying members, creditor with one lakh outstanding, others | "Any person", or in connection with a section 216 investigation |
Both are Tribunal orders. See section 221 on freezing of assets for the asset-side provision.
Penalty in sub-section (2) as it stands today
Where securities "are issued or transferred or acted upon in contravention of an order of the Tribunal under sub-section (1)":
| Who | Punishment |
|---|---|
| The company | Fine of not less than one lakh rupees, extending to twenty-five lakh rupees |
| Every officer of the company who is in default | Imprisonment up to six months, or fine of not less than twenty-five thousand rupees and up to five lakh rupees, or both |
The phrase "acted upon" is wide. Registering a transfer, for example, or allowing a holder to exercise a restricted right, could amount to acting upon the securities, depending on the terms of the order.
Proposed change (Corporate Laws (Amendment) Bill, 2026)
Clause 66 of the Bill, "Amendment of section 222", proposes two things:
- In sub-section (1), the brackets, figure and word "(1) Where" would be replaced by "Where". This is a consequential change, because the section would then have only one sub-section.
- Sub-section (2) would be omitted.
The Bill's notes on clauses say that clause 66 seeks to omit the offence in sub-section (2) of section 222, and that section 425, the power to punish for contempt, "shall be applicable in such case".
Status. The Bill was introduced in the Lok Sabha on 23 March 2026, the Joint Committee's report came on 3 August 2026, and it is not law as on 30 September 2026. Until Parliament passes it and it is brought into force, sub-section (2) and its penalties remain as described above. If it becomes law in this form, the Tribunal's restriction order would remain, but breach would be dealt with as contempt of the Tribunal's order rather than through the fixed fine and imprisonment in sub-section (2). Treat that as a description of the proposal, not of the present position.
Practical examples
Example 1: ownership probe. An inspector under section 216 is tracing the holders behind a block of shares. The Tribunal orders that the shares shall not be transferred for one year. A transfer registered during that year would fall under sub-section (2) as the law stands.
Example 2: complaint about a new allotment. A member complains that an allotment is being arranged to dilute a rival group and that the real allottees are not known. If the Tribunal is satisfied on the three conditions, it may restrict the securities "to be issued".
Example 3: a director acting on a restricted transfer. The board approves a transfer despite an order. The company is exposed to the fine, and the officers in default to the sub-section (2) punishment, unless and until the Bill's omission becomes law.
Need help with securities restrictions?
If a restriction order has been sought or made over your company's securities, the first step is to understand exactly what the order covers and what must not be done while it is in force. We can go through the order and your share records with you in a legal dispute resolution discussion.
Key takeaways
- The Tribunal can restrict securities issued or to be issued, for up to three years, where facts cannot otherwise be found out.
- It acts in connection with a section 216 investigation or on a complaint by any person.
- Contravention attracts a fine of one lakh to twenty-five lakh rupees on the company and up to six months' imprisonment or a fine of twenty-five thousand to five lakh rupees, or both, on officers in default.
- Bill 2026 clause 66 proposes to omit sub-section (2). It is pending and not law.
- The Bill's notes point to contempt under section 425 as the consequence if the omission takes effect.
Read next
- Section 216: Investigation of ownership of a company
- Section 221: Freezing of assets
- Section 223: Inspector's report
- Sections 241–244: Oppression and mismanagement
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.