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Doctors Medicines MCQs Q&A

Study the following case and express your opinion:

A Company stated in its prospectus that it has been making profits for the last 5 years. However, Mr. X., an investor found out that two years back the company had not made any profit. The prospectus was filed with ROC on 1st January 2017 and was issued to the public on 10th February 2018.

i. Can Mr. X state that there was mis-statement in the prospectus?

ii. If found guilty which two types of liability will the company and its officers face?

iii. Can the prospectus be valid for the issue to the public on 10th February 2018?

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1 Answers

i. Yes, Mr. X can state mis-statement in the prospectus.

ii.

  • Civil liability (Pay compensation for loss suffered by the investor)
  • Criminal liability companies or their officers will be fined or imprisoned or both.
iii. No, the prospectus will not be valid for the issue to the public on 10th February 2018.
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