Section 35 — Civil liability for mis-statements 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.
1[(c) that, as regards every misleading statement purported to be made by an expert or contained in
what purports to be a copy of or an extract from a report or valuation of an expert, it was a correct and
fair representation of the statement, or a correct copy of, or a correct and fair extract from, the report or
valuation; and he had reasonable ground to believe and did up to the time of the issue of the prospectus
believe, that the person making the statement was competent to make it and that the said person had
given the consent required by sub-section (5) of section 26 to the issue of t he prospectus and had not
withdrawn that consent before 2[filing of a copy of the prospectus with the Registrar ] or, to the
defendant's knowledge, before allotment thereunder.]
(3) Notwithstanding anything contained in this section, where it is proved that a prospectus has been