Sunday, 5 October 2014

Companies Acts 1956: Misstatement in prospectus

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This topic deals with misstatement in prospectus.
Every prospectus must have all the correct statements regarding the company the statements must be completely correct hence if there is a misstatement then penalties will be imposed against the company as well as its directors, experts and officers.
Misstatement includes the following:
Telling a lie.
Not speaking something when you have a duty to speak.
Telling something by using misleading language.
Example (Rex vs Kylsent)

Civil Liability on Misstatement in Prospectus

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Criminal Liability on Misstatement in Prospectus
Defenses against penalty:
Following are the defenses available to the directors Officers and experts of a company:
They can prove that misstatement was committed without their knowledge.
They can prove that the statement was correct was in the beginning and later on it became misstatement.

They can prove that the prospectus was issued without their consent.

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