CA Inter P2 · Chapter 3 · Question 5 of 10
Which of the following persons is NOT liable to pay compensation under section 35 for a misleading statement in a prospectus?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A person who withdrew his consent to act as director before the issue of the prospectus, and the prospectus was issued without his authority
Explanation
Section 35(1) makes directors, persons named with their consent as proposed directors, promoters, persons who authorised the issue and experts liable to compensate those who subscribed on the faith of a misleading prospectus. Section 35(2) excuses a person who, having consented to become a director, withdrew that consent before the issue, and the prospectus was issued without his authority or consent.
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