
Financial Statement Frauds | 13
‘Purchase’ of Shares at High Premium
This is the most widely adopted method for in-
ating net worth and equity base of companies in
India. The promoters place funds at the disposal
of their relatives and/or friends, and ask them to
purchase shares at an unjustiably high premium
through private placement routes. The same mon-
ey is siphoned o from the company and reused for
equity rigging. The process of siphoning o funds
from the company for such purposes has been ex-
plained at length with examples in Chapter 3.
A company took a loan of INR 30 crore from
a bank. After disbursal, the amount was trans-
ferred to ...