Company and officers responsible for issuing Prospectus are liable for mis-statements in Prospectus.
Justify the following statement:
Company and officers responsible for issuing Prospectus are liable for mis-statements in Prospectus.
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- The prospectus is a written document giving an invitation to the public to purchase shares or debenture of the company.
- It provides all the necessary information about a company, its business, the management, financial structure, etc., of a company.
- A prospectus must be prepared very carefully and accurately.
- It should contain true and correct information and honest disclosure of facts.
- A company and all those officials can be held responsible for any mis-statement in the prospectus.
- These people have to face severe consequences.
- The shareholder can cancel the contract.
- Persons authorizing the issue of prospectus containing mis-statement are punishable with imprisonment of two years and a fine up to ₹ 5,000.
- Thus, I agree with the above statement.
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