Effect of rescission, Business Law and Ethics

Effect Of Rescission:

Where a contract of allotment is rescinded, the former shareholder will be entitled to his money back (normally with interest) and to a refund of any expenses to which he has ben put: RE: BRITISH GOLD FIELDS OF WEST AFRICA LTD. The plaintiff will also be entitled to have the company's registers RECTIFIED by deleting his name therefrom, and he can prove in the company's liquidation for the amount due to him: RE: BRITISH GOLD FIELDS OF W. AFRICA.

 CIVIL LIABILITY OF DIRECTORS AND PROMOTERS

 Any person who subscribed for any shares or debentures on the faith of the prospectus may sue for compensation under S.45 of the Companies Act.

The section is limited to prospectuses issued by or on behalf of the company and will afford no relief on an offer for sale or placing by existing holders (unless the company has made the allotment with that in view, so that S.47 applies).

The section cannot be invoked by market purchasers of securities after the original allotment.

The only persons who can be made liable under the section are:-

a)      directors at the time of the matter of the prospectus;

b)      persons who consented to be named in the prospectus as directors or future directors;

c)      promoters of the company, and

d)      every person who authorised the issue of the prospectus.

S.45 (2) states that "no person shall be liable... if he proves...". This means that the directors or promoters are prima facie liable there under unless they successfully avail themselves of the statutory defenses under the subsection, (i.e. they are presumed to be liable until they prove their innocence).

Posted Date: 1/12/2013 3:10:30 AM | Location : United States







Related Discussions:- Effect of rescission, Assignment Help, Ask Question on Effect of rescission, Get Answer, Expert's Help, Effect of rescission Discussions

Write discussion on Effect of rescission
Your posts are moderated
Related Questions
Explain UNCTOC UNCTOC identified the concept of an organized crime. A crime is termed as an "Organized Crime" when people in different countries and/or of different national

Drawee - Negotiable Instruments There following points concerning to the drawee should be noted. Through S.4(2) (a) provides that: like; (i) The drawee is dead or might bankr

Chartered Companies: A chartered company is formed when the Queen or King of England issues a charter, or "letters patent", to a group of people who intend to carry on a busin

Question 1: Explain the main elements that constitute a valid contract. Question 2: Explain the concepts of negligence and remoteness of damage in tort law. Questio

Q. Show Recent developments in mitigating phoenix activity? Since these previous works, there have been significant developments in mitigating phoenix activity. Following Tr

Self-Control : Most entrepreneurs believe they can do the job better than anyone else and will strive for maximum responsibility and accountability. An entrepreneur needs to maint

State about the Security Council of United Nations? The Security Council: The Security Council has main responsibility for the preservation of international peace and sec

Define the term multiple decision makers - Strategic Voting The following lines, from Austen-Smiths' (1986) clarify the position quite succinently. He writes, 'so in elections

Q. Corporate form based definition of phoenix activity? As phoenix activity entails the manipulation of the corporate form, it can be defined in these terms. A definition could

Duties of Directors: The duties of directors are usually considered under two broad headings, namely- i. Duties of care and skill at common law, and ii. Fiduciary duties