CA Inter P2 · Chapter 3 · Question 10 of 10
Section 34 expressly provides that every person who authorises the issue of a prospectus containing an untrue or misleading statement shall be liable under:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Section 447, which deals with punishment for fraud
Explanation
Section 34 provides that where a prospectus includes any untrue or misleading statement, or omits a matter likely to mislead, every person who authorises its issue is liable under section 447 (fraud). It is a defence to prove that the statement or omission was immaterial, or that he had reasonable grounds to believe it was true. Section 35 deals with civil liability separately.
More Prospectus and Allotment of Securities MCQs
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- Q5Which of the following persons is NOT liable to pay compensation under section 35 for a misleading statement in a prospectus?
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