Companies Act Section 34 — Criminal liability for mis-statements in prospectus

CHAPTER III PROSPECTUS AND ALLOTMENT OF SECURITIES

Commercial / Corporate

Summary

If a prospectus issued, circulated, or distributed under this Chapter contains any statement that is untrue or misleading in its form or context, or if any inclusion or omission of matter is likely to mislead, then every person who authorises the issue of such prospectus will be liable under section 447.

The proviso to this section states that this liability will not apply to a person if he proves that the statement or omission was immaterial, or that he had reasonable grounds to believe, and did believe up to the time of the prospectus's issue, that the statement was true or that the inclusion or omission was necessary.

Official Text

Where a prospectus, issued, circulated or distributed under this Chapter, includes any statement which is untrue or misleading in form or context in which it is included or where any inclusion or omission of any matter is likely to mislead, every person who authorises the issue of such prospectus shall be liable under section 447:

Provided that nothing in this section shall apply to a person if he proves that such statement or omission was immaterial or that he had reasonable grounds to believe, and did up to the time of issue of the prospectus believe, that the statement was true or the inclusion or omission was necessary.