Académique Documents
Professionnel Documents
Culture Documents
Share Capital
&
Borrowings
An Invitation to the public: The Prospectus
•investors’ mood,
(Consent of the directors, managers ,Procedure and time schedule for the allotment and
issues of certificate, minimum subscription, etc..)
What mis-statement ?
•persons issuing prospectus must state every thing accurately and not to omit
material facts
•Liability of Co.
Remedies against the Company
• In practice:
• claim against company is generally for cancellation of contract of
allotment
• claims against director, promoter , expert or other persons are for
damages
Remedies against Directors/Promoters or
persons responsible for issue of prospectus
• directors not liable if they honestly believed the statement to be true –up to the
time of allotment
• Knowingly
• Ex: Prospectus contains statement – object of debenture – to develop trade but in fact
was to pay pressing liabilities
Liability of Directors etc. under Company Law
• Exceptions
•But liable only for his own untrue statement ,Wrong Report
/Wrong valuation which is the part of prospectus
•With both.
Problem
In the present case, the allottee shall have the right to claim
compensation from the company for any loss that he might
have sustained in terms of the value of shares.
• to receive dividends,
•It means appropriation (to devote money for special purpose), out of the
previously un-appropriated capital of the company of a certain number
of shares to a person
•Share certificate must be issued under the common seal of the company
affixed in the presence of two directors and the secretary or some other
person appointed by the Board for the purpose
Share warrant
•within four months from the date the instrument of transfer was
delivered to the company ,where no notice is received
•Null and void , not enforceable, no legal or equitable right against co.
to recover the loan
1. Injunction- suit for injunction restraining the company- from parting with
the money-can get money if not spent and is in actual possession of the company
Suit against the dir. Personally for recovery of damages for exceeding their
authority to borrow - but dir. not liable- if ulrta-vires borrowing could be discovered
by memo. Or article
•company liable if lender does not know about the intended misuse
of money
•Lender knows money is borrowed for business – not Co.’s object-
loan is ultra vires- invalid
Methods of borrowing
•Fixed Charge
•On crystalisation company looses the right to deal with the property
and charge holder can enforce the security charged to him