Question

Write short notes on the following :
State the liabilities for mis-statement in the prospectus.

Answer 1

As per Section 65, a statement included in a prospectus shall be deemed to be untrue if the statement is misleading in the form and context in which it is included. Where there is any omission of a matter from the prospectus and this is made to mislead, the prospectus is deemed to be called as a prospectus in which an untrue statement is included. Not only in prospectus, but a statement can be said to mislead even if it is present in any report or memorandum by reference incorporated therein or issued therewith. The liability accrues where any person subscribes for any shares or debentures on the faith of the prospectus for any loss or damage he may have sustained by reason of untrue statement included therein.