35. Civil liability for misstatements in prospectus.
(1) Where a person has subscribed for securities of a company acting on any
statement included, or the inclusion or omission of any matter, in the prospectus which is
misleading and has sustained any loss or damage as a consequence thereof, the company
and every person who—
(a) is a director of the company at the time of the issue of the prospectus;
(b) has authorised himself to be named and is named in the prospectus as a
director of the company, or has agreed to become such director, either immediately or
after an interval of time;
(c) is a promoter of the company;
(d) has authorised the issue of the prospectus; and
(e) is an expert referred to in sub-section (5) of section 26,
shall, without prejudice to any punishment to which any person may be liable under section
36, be liable to pay compensation to every person who has sustained such loss or damage.
(2) No person shall be liable under sub-section (1), if he proves—
(a) that, having consented to become a director of the company, he withdrew his
consent before the issue of the prospectus, and that it was issued without his authority
or consent; or
(b) that the prospectus was issued without his knowledge or consent, and that
on becoming aware of its issue, he forthwith gave a reasonable public notice that it
was issued without his knowledge or consent.
(3) Notwithstanding anything contained in this section, where it is proved that a
prospectus has been issued with intent to defraud the applicants for the securities of a
company or any other person or for any fraudulent purpose, every person referred to in subsection
(1) shall be personally responsible, without any limitation of liability, for all or any of
the losses or damages that may have been incurred by any person who subscribed to the
securities on the basis of such prospectus.