THE COMPANIES ORDINANCE, 1972

Part III.—Share Capital and Debentures

Prospectuses and allotments

40.— (1) No prospectus shall be issued in the name or on account of a company before it is incorporated!

(2) A prospectus issued by or on behalf of a company shall be reduced to writing and shall be dated, and, subject to subsection (16) (b), that date shall, unless the contrary is proved, be taken as the date of the first issue of the prospectus.

(3)  A copy of every prospectus, signed by every director of the company and every person who is named in the prospectus as a proposed director of the company, or by his agent authorised in writing, shall be delivered to the Registrar for registration not less than twenty-eight days before the date when it is first issued.

(4)  Any person to whom a prospectus has been issued, a copy of which has not been delivered for registration under the last foregoing subsection, may deliver to the Registrar a copy of it authenticated by his signature or the signature of his agent, or if it was not communicated to him in writing, a document so authenticated, setting out the information in respect of the company and the shares or debentures in question which was communicated to him in connection with the prospectus.

(5)  If the Registrar is satisfied that any statement, promise or forecast contained in a prospectus is false, deceptive or misleading, or that any prospectus does not contain any statement, report or account required to be contained in it by this Ordinance, he shall by an order (in this Ordinance called a "prohibition order") served on the company prohibit it from issuing the prospectus, or if the prospectus has already been issued, from issuing further copies of it and from allotting any of the shares offered for subscription by it :

Provided that if a copy of the prospectus has been delivered to the Registrar under subsection (3), he may not serve a prohibition order on the company later than twenty-six days after the copy was delivered to him.

(6)  A prohibition order shall identify the part or parts of the prospectus to which the Registrar objects, and shall state the Registrar's reasons for making the order.

(7)  If the Registrar is satisfied that a prospectus, a copy of which has been delivered to him under subsection (3), is not objectionable on any of the grounds mentioned in subsection (5), he may by a written notice authorise the company to issue the prospectus before the expiration of the period of twenty-eight days mentioned in subsection (3), and this section shall then apply as' though the said period of twenty-eight days had expired.

(8)  The Registrar may accept any amendment offered by the company to a prospectus, and in particular may accept an amendment stating the price at which the shares or debentures are offered for subscription, or the price below which bids or tenders for the shares or debentures will not be accepted. The Registrar may revoke a prohibition order on accepting an amendment, but if the prospectus has already been issued, he shall do so only if he has satisfied himself that all persons to whom the prospectus has been issued have been adequately notified by individual notice, newspaper advertisements or otherwise, of the contents of, and reason for, the amendment.

(9)  A company which is aggrieved by a prohibition order, or by the refusal of the Registrar to revoke a prohibition order, may appeal to the court within one month after the order is served on it, or the refusal is notified to it (as the case may be), and the court shall on the hearing of the appeal have the same powers as the Registrar, and its decision shall be final.

(10)  The Registrar may require any director or officer of the company to make and deliver to him a signed declaration deposing to any facts which the Registrar considers relevant to the exercise of his powers under this section, or as a condition of giving an authorisation under subsection (7), or accepting an amendment to a prospectus, or revoking a prohibition order.

(11)  Every prospectus issued to the public shall contain the following statement in clearly legible print at the head or commencement of it—

"A copy of this prospectus signed by every director and proposed director of the company has been delivered to the Registrar of Companies pursuant to the Companies Ordinance, 1971, but the registration of the copy of this prospectus by the Registrar does not imply any representation by the Government that the securities offered by this prospectus are a desirable investment, or that the contents of this prospectus are true or complete".

If two or more documents are issued to the same person in respect of the same offer of shares or debentures for subscription, and both or all of the documents are prospectuses, it suffices that the first one of them to be issued to that' person contains the statement required by this subsection.

(12)  An offence is committed if a company—

(a) issues a prospectus without delivering a copy thereof to the Registrar ; or

(b)   issues a prospectus before the period specified in subsection (3) has expired, unless the Registrar has given an authorisation under subsection (7); or

(c)   issues a prospectus, or allots shares or debentures thereunder, after a prohibition order in relation to the prospectus has been served on it, unless the order has been revoked ; or

(d)   issues a prospectus to the public which does not contain the statement required by subsection. (11) in clearly legible print at the head or commencement thereof ; or

(e)   issues a prospectus to which amendments have been; offered and have been accepted by the Registrar, but does not incorporate all those amendments therein.

(13)  If an offence is committed under the last foregoing subsection, every director of the company and every person who is named in the prospectus as a proposed director ©fi the company shall be guilty of an offence, unless he satisfies the court that he did not participate or acquiesce in the commission of the offence, or that he made a mistake of fact in good faith and that if the facts had been as he believed them to be, no offence would have been committed.

(14)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees or imprisonment for not more than two years, or by both such fine and imprisonment.

(15)  A prosecution for an offence under this section may not be brought against a company which issues a prospectus offering its own shares or debentures for subscription.

(16)  For the purpose of this Ordinance—

(a)   a prospectus is issued to the public if it is issued to more than twenty-five persons ;

(b)   a prospectus is first issued when it is first published as a newspaper advertisement, or when a copy of it is first delivered or shown to any person (other than a person invited to enter into an underwriting contract) with a view to inducing him to subscribe for the shares or debentures efeed by it for subscription, whichever is the earlier;

(c)   shares or debentures are offered by a company for subscription if they are offered for allotment in consideration of cash, or in consideration of the transfer or surrender of other shares or debentures, whether issued by the same company or not, and whether any supplemental payment of cash is to be made by or to the company or not; and

(d)   an underwriting contract is a contract by which a person agrees to subscribe for shares or debentures with a view to offering all or any of them for sale, or to subscribe for such of the shares or debentures offered for subscription by a prospectus as are not subscribed for by the persons to whom the prospectus is addressed ; and the expressions "underwriter" and "to underwrite" shall be construed accordingly.

41.—(1) Every prospectus issued by or on behalf of a company shall contain the statements specified in Part I of the Fourth Schedule to this Ordinance, and every prospectus issued to the public by or on behalf of a company shall additionally contain the statements and the reports and accounts specified in Part II of the Fourth Schedule.

(2)  Part III of the Fourth Schedule shall govern the interpretation of Parts I and II thereof.

(3)  The Registrar may propose that amendments be made to any prospectus, whether a copy of it has been delivered to him or not, in order that it shall state clearly, accurately and concisely any of the matters required to be stated in it, or in any report or account, or abstract of a report or account, required to be contained in it, or in order that it shall present such statements, reports and accounts in a fair manner, giving proper weight to favourable and unfavourable aspects, and in a sequence which will make them most easily understood by the persons to whom the prospectus is addressed.

(4)  If a company refuses to make any amendment proposed by the Registrar under the last foregoing subsection within seven days after the proposal is communicated to it, the Registrar may make a prohibition order under section 40(5) as though the prospectus did not comply with subsection (1) of this section, and subsections (6), (8), (9), (10) and (12) of section 40 shall apply accordingly:

Provided that if the company has delivered a copy of a prospectus to the Registrar under section 40(3), the Registrar shall not make a prohibition order under this subsection unless he has communicated a proposal under the last foregoing subsection to the company not later than fourteen days after the copy of the propectus was delivered to him.

(5)  A condition requiring or binding an applicant for shares in or debentures of a company to waive compliance with any requirement of this section, or purporting to affect him with notice of any contract, document, or matter not specifically referred to in the prospectus, shall be void.

(6)  It shall not be lawful to issue any form of application for shares in or debentures of a company to any person other than a person invited to enter into an under writing contract, unless the form is issued with a prospectus which complies with the requirements of this section.

(7)  If an application is made to a stock exchange in Seychelles or to a recognised overseas stock exchange for the shares or debentures offered for subscription by a prospectus to be quoted or dealt in thereon, and the making of the application is notified to the Registrar by the company or its broker (being a membebr of that stock exchange) not later than seven days after a copy of the prospectus was delivered to the Registrar under section 40(2), the contents of the prospectus shall be deemed to satisfy the requirements of subsection (1) of this section if they comply with the rules and requirements of that stock exchange.

(8)  A notification under the last foregoing subsection shall be accompanied by a certificate by the directors of the company and the company's broker (being a member of the stock exchange in question) that to the best of their knowledge, information and belief the prospectus, a copy of which has been delivered to the Registrar, does comply with the rules and requirements of the stock exchange, and the last foregoing section shall not apply to the prospectus unless such a certificate is delivered to the Registrar.

(9)  An offence is committed if a company :—

(a) issues a prospectus which does not satisfy, or is not deemed to satisfy, the requirements of subsection (1) of this section ; or

(b)   issues a form of application for shares or debentures in contravention of subsection (6); or

(c)   notifies the Registrar itself or through its broker that an application has been made to a stock exchange in Seychelles or a recognised overseas stock exchange for shares or debentures to be quoted or dealt in thereon when no such application has been made ; or

(d)   delivers a certificate to the Registrar under subsection (8) which the person giving the certificate knows or has reason to believe to be false.

(10)  If an offence is committed under the last foregoing subsection, every director of the company and every person who is named in the prospectus as a proposed director of the company shall be guilty of that offence, unless he satisfies the court that he did not participate or acquiesce in the commission of the offence, or that he made a mistake of fact in good faith and that if the facts had been as he believed them to be, no offence would have been committed.

(11)  A prosecution may not be brought under this section against a company which issues a prospectus offering its own shares or debentures for subscription.

(12)  A person acting, or purporting to act, as broker to a company shall be guilty of an offence if—

(a)   he notifies the Registrar that an application has been made to a stock exchange in Seychelles or to a recognised overseas stock exchange for shares and debentures to be quoted or dealt in thereon, and either—

(i) he is not a member of that stock exchange ; or

(ii) no such application has been made ; or

(b)   he makes or delivers to the Registrar a certificate under subsection (8), and either : —

(i) he is not a member of the stock exchange to which the certificate relates ; or

(ii) he knows or has reason to believe that the certificate is false.

(13) An offence under this section shall be punishable by a fine not exceeding ten thousand rupees or imprisonment for not more than two years, or by both such fine and imprisonment

(14) The Governor in Council may by regulations supplement, amend or rescind any of the provisions of the Fourth Schedule to this Ordinance, and it shall then take effect subject to the modifications made by such regulations.

42.—(1) No allotment shall be made of any shares in or debentures of a company in pursuance of a prospectus, and no proceedings shall be taken on applications made in pursuance of a prospectus, until the beginning of the third day after that on which the prospectus is first issued, or the third day after the earliest date on which the prospectus may first be issued lawfully under section 40 (whichever is the later), or such later time (if any) as may be specified in the prospectus. The beginning of the said third day or such later time as aforesaid is hereinafter in this Ordinance referred to as "the time of the opening of the subscription lists".

(2)  Any allotment made in contravention of this subsection shall be void, but without prejudice to the validity of any allotment of the same shares or debentures later made to the same applicant

(3)  An application for shares in or debentures of a company which is made in pursuance of a prospectus shall not be revocable until after the expiiation of the third day after the time of the opening of the subscription lists, or the giving before the expiration of the said third day, by some person responsible under section 46 for the prospectus, of a public notice having the effect under that section of excluding or limiting the responsibility of the person giving it.

(4)  If a company contravenes subsection (1) its directors who are in default shall be guilty of an offence punishable by a fine not exceeding one thousand rupees.

43.—(1) Unless all the shares or debentures offered for subscription by a prospectus issued to the public are under written, the prospectus shall state the minimum amount of money required to be raised by the company by issuing the said shares or debentures before it will make any allotments of such shares or debentures (in this Ordinance called "the minimum subscription").

(2)  If the minimum subscription is not subscribed within fourteen days after the prospectus is first issued, all allotments of shares or debentures already made thereunder shall be void, and no further allotments shall be made.

(3)  Until the minimum subscription has been subscribed, all money received by or on behalf of the company from applicants for any of the shares or debentures shall upon receipt be deposited with a bank, which shall hold it as an agent on behalf of the applicants.

(4)  Unless the minimum subscription is subscribed within fourteen days after the prospectus is first issued, the bank with whom money has been deposited under subsection (3), or if money has not been deposited under the said subsection, the company or the person who received it on the company's behalf, shall forthwith return the money to the applicants from whom it was received, and if the money is not returned within seven days after the expiration of the said fourteen days, the bank with whom the money has been deposited, the company, its directors and any person who received money which has not been deposited with a bank shall be jointly and severally liable to repay it to the said applicants with interest thereon calculated from the expiration of the said fourteen days at the rate of ten per centum per annum.

(5)  If within fourteen days after a prospectus is first issued, a person responsible for the prospectus under section 46 gives a public notice having the effect under that section of limiting or excluding the responsibility of the person giving it, this section shall take effect as if the said fourteen days expired on the day when the said public notice is given.

(6)  Any condition requiring or binding any applicant for shares or debentures to waive compliance with any requirement of this section shall be void.

. (7) An offence is committed if : —

(a) a company issues a prospectus which should state a minimum subscription but does not do so ; or

(b) a company or person acting on its behalf does not deposit money received from applicants in accordance with subsection (3) forthwith upon it being received ; or

(c) a company allots shares or debentures before or after the expiration of fourteen days from the first issue of the prospectus under which they are allotted, if the minimum subscription is not subscribed within the said fourteen days; or

(d) a bank, or a company, or a person acting on the company's behalf does not return money received from applicants in compliance with subsection (4).

(8)  If an offence is committed under the last foregoing subsection, every director of the company and every person who is named in the prospectus as a proposed director of the company shall be guilty of that offence, unless he satisfies the court that he did not participate or acquiesce in the commission of the offence, or that he made a mistake of fact in good faith and that if the facts had been as he believed them to be, no offence would have been committed.

(9)  If an offence is committed under paragraph (d) of subsection (7), the bank or person acting on the company's behalf shall also be guilty of that offence.

(10)  A prosecution may not be brought under this section against a company which issues a prospectus offering its own shares or debentures for subscription.

(11)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or by both such fine and imprisonment.

(12)  For the purpose of this section : —

(a)   shares or debentures are underwritten if before the prospectus is first issued binding contracts to subscribe for them, or to subscribe for such of them as are not subscribed for by the persons to whom the prospectus is addressed, have been entered into with the company by a member of a stock exchange in Seychelles or of a recognised overseas stock exchange, or by such other persons as the Minister shall approve in the case of the particular prospectus by which the shares or debentures are offered for subscription, and a copy of each such contract has been delivered to the Registrar; and

(b)   the minimum subscription is subscribed if applications are received by the company, or by a person acting on its behalf, for shares or debentures whose issue price in the aggregate equals or exceeds the minimum subscription, and the amount payable on application for such shares or debentures is received in legal tender, or in the form of cheques or banker's drafts or banker's cheques which the company or that person has no reason to believe will be dishonoured on presentation.

(13) This section does not apply to a prospectus issued by a company which offers shares or debentures for subscription solely in consideration of the transfer or surrender of other shares or debentures, whether issued by the company or not.

44.—(1) If a prospectus states that an application has been or will be made to a stock exchange for the shares or debentures offered by it for subscription to be quoted or dealt in thereon, and the application is not granted within fourteen days after the prospectus is first issued, or such further period, not exceeding fourteen days, as the stock exchange notifies the company it requires in order to consider the application, all allotments of shares or debentures made under the prospectus shall be void, and no further allotments shall be made.

(2)  Until the application made to the stock exchange is granted, all money received by or on behalf of the company from applicants for any of the shares or debentures shall upon receipt be deposited with a bank which shall hold it as an agent on behalf of the applicants.

(3)  Unless the application made to the stock exchange is granted within fourteen days or twenty-eight days (as the case may be) after the prospectus is first issued, the bank with whom the money has been deposited under subsection (2), or if money has not been deposited under the said subsection, the company or the person who received it on the company's behalf, shall forthwith return the money to the applicants from whom it was received, and if the money is not returned within seven days after the. expiration of the said fourteen days or twenty-eight days (as the case may be), the bank with whom the money has been deposited, the company, its directors and any person who received money which has not been deposited with a bank, shall be jointly and severally liable to tffeipay it to the said applicants with interest thereon calculated from the expiration of the said fourteen days or twenty-eight days (as the case may be) at the rate of ten per centum per annum.

(4)  If within fourteen days or twenty-eight days (as the case may be) after a prospectus is first issued, a person responsible for the prospectus under section 46 of this Ordinance gives a public notice having the effect under that section of limiting or excluding the responsibility of the person giving it, this section shall take effect as if the said fourteen days or twenty-eight days (as the case may be) expired on the day when the said public notice is given.

(5)  Any condition requiring or binding any applicant for shares or debentures to waive compliance with any requirement of this section shall be void.

(6)  This section shall apply to shares or debentures for which an underwriter agrees to subscribe as if he had applied for them under the prospectus.

(7)  An offence is committed if : —

(a)   a company issues a prospectus which states that an application has been made, or is proposed or intended to be made, for the shares or debentures offered for subscription to be quoted or dealt in a stock exchange, unless the application is made before or within three days after the prospectus is first issued ; or

(b)   a company or person acting on its behalf does not deposit money received from applicants in accordance with subsection (2) forthwith upon it being received ; or

(c)   a company allots shares or debentures after the expiration of fourteen days or twenty-eight days (as the case may be) from the first issue of the prospectus under which they are allotted, if the application to the stock exchange for the shares or debentures to be quoted or dealt in on it which was mentioned in the prospectus has not been granted within the said fourteen or twenty-eight days (as the case may be); or

{d) a company allots shares or debentures under a prospectus after the refusal of a stock exchange to grant the quotation or permission to deal in the shares or debentures which was mentioned in the prospectus under which the shares or debentures were allotted ; or

(e) a bank, or a company, or a person acting on the company's behalf does not return money received from applicants in compliance with subsection (3).

(8)  If an offence is committed under the last foregoing subsection, every director of the company and every person named in the prospectus as a proposed director of the company shall be guilty of that offence, unless he satisfies the court that he did not participate or acquiesce in the commission of the offence, or that he made a mistake of fact in good faith and that if the facts had been as he believed them to be, no offence would have been committed.

(9)  If an offence is committed under paragraph (d) of subsection (7), the bank or person acting on the company's behalf shall also be guilty of that offence.

(10)  A prosecution under this section shall not be brought against a company which issues a prospectus offering its own shares or debentures for subscription.

(11)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or by both such fine and imprisonment.

45.—(1) A shareholder or debenture holder may bring an action against a company which has allotted shares or debentures under a prospectus, for the rescission of all allotments made under the prospectus and the repayment to the holders of the shares or debentures of the whole or part of the issue price which has been paid in respect of them, if either : —

(a)   the prospectus contained a material statement, promise or forecast which was false, deceptive or misleading ; or

(b)   the prospectus did not contain a statement, report or account required to be contained in it by section 41 and the Fourth Schedule to this Ordinance.

(2) In this section "shareholder" means a holder of any of the shares allotted under the prospectus, whether the original allottee or a person deriving title under him ; and

"debenture holder" means a holder of any of the debentures allotted under the prospectus, whether the original allottee or a person deriving title under him.

(3)  For the purpose of this section a prospectus shall be considered as containing a material statement, promise or forecast if the statement, promise or forecast was made in such a manner, or context, or in such circumstances, as to be likely to influence a reasonable man in deciding whether to invest in the shares or debentures offered for subscription ; and a statement, report or account shall be considered as omitted from a prospectus if it was omitted entirely, or if it did not contain all the information required by this Ordinance. In an action brought under this section it shall not be necessary for the plaintiff to prove that he, or the person to whom the shares or debentures he holds were allotted, was in fact influenced by the statement, promise or forecast which he alleges to be false, deceptive or misleading, or by the omission of any report, statement, or account required to be contained in the prospectus.

(4)  No action shall be brought under this section more than six months after the first issue of the prospectus under which shares or debentures were allotted to the plaintiff or the person from whom he derives title.

(5)  If judgment is given in favour of a plaintiff under this section, the allotment of all shares or debentures under the same prospectus, whether allotted to the plaintiff or the person from whom he derives title or to other persons, shall be void, and judgment shall be entered in favour of all such persons (described by the collective title of "holders of shares or preference shares or ordinary shares or debentures issued under a prospectus dated ...............") for the payment by the company to them severally of the amount of the issue price paid up in respect of the shares or debentures which they respectively hold :

Provided that if any holder of shares or debentures at the date judgment is entered as aforesaid signifies to the company in writing (whether before or after the entry of judgment) that he waives his right to rescind the allotment of shares or debentures which he holds, he shall be deemed not to be included among the persons in whose favour judgment is entered,

(6)  The operation of this section shall not be affected by the company being wound up or ceasing to pay its debts as they fall due, and in the winding up of the company a repayment due under the last foregoing subsection shall be treated as a debt of the company payable immediately before the repayment of the shares or debentures of the class in question, that is to say—

(a)   in the case of a repayment in respect of shares, immediately before repayment of the capital paid up on shares of the same class, and the payment of any accumulated or unpaid dividends or any premiums in respect of such shares, but after the payment of all debts of the company and the satisfaction of all claims in respect of prior ranking classes of shares; and

(b)   in the case of a repayment in respect of debentures, immediately before the repayment of the principal of debentures of the same class and the payment of any unpaid interest or any premiums in respect of such debentures, but after the payment of all debts or liabilities of the company which this Ordinance or section 20 of the Companies (Debentures and Floating Charges) Ordinance, 1970 requires to be paid before such debentures, and after the satisfaction of all rights in respect of prior ranking classes of debentures.

(7)  It shall be a defence to an action under this section for the company to prove that the plaintiff was the allottee of the shares or debentures in respect of which the action was brought, and that at the time they were allotted to him he knew that the statement, promise or forecast of which he complains was false, deceptive or misleading, or that he knew of the omission of the matter from the prospectus of which he complains ; and it shall also be a defence for the company to prove that such a plaintiff has received a dividend or payment of interest, or has voted at a meeting of members, shareholders or debenture holders (as the case may be) since he discovered that the statement, promise or forecast of which he complains was false, deceptive or misleading, or since he discovered the omission of the matter from the prospectus of which he complains :

Provided that an action shall not be dismissed if there are several plaintiffs, unless the company proves that it has a defence under this subsection against each of them, and in any case in which the company proves that it has a defence against the plaintiff or all the plaintiffs, the court may, instead of dismissing the action, substitute some other shareholder or debenture holder of the same class as a plaintiff, upon his application.

(8)  If a company would have a defence under the last foregoing subsection but for the fact that the allottee of the shares or debentures in respect of which the action is brought has transferred them, the company may bring an action against the allottee for an indemnity against any sum which the court orders it to pay to the plaintiff in the action.

(9)  The two last foregoing subsections (except the proviso to subsection (7) shall apply also in the case of shares and debentures of the same class as those in respect of which a plaintiff obtains and enters judgment against the company under subsection (5), with the substitution in subsection (7) of references to the holder of the shares or debentures for references to the plaintiff, and with the substitution in subsections (7) and (8) of references to a right for the company to have the judgment set aside in respect of the shares or debentures for references to a defence to the action.

(10)  This section shall apply to shares and debentures allotted pursuant to an underwriting contract as if they had been allotted under the prospectus.

(11)  This section shall apply to shares or debentures issued under a prospectus which offers them for subscription in consideration of the transfer or surrender of other shares or debentures (whether with or without the payment of cash by or to the company), as though the issue price of the shares or debentures offered for subscription were the fair value (as ascertained by the court) of the shares or debentures to be transferred or surrendered, plus the amount of cash (if any) to be paid to the company or less the amount of cash (if any) to be paid by the company,

(12)  The rights conferred on shareholders and debenture holders by this section shall be in substitution for all rights to rescission and restitution and to sue the company for damages or compensation under Articles 1109, 1116, 1117, 1131, 1304, 1382, 1383 and 1384 of the Civil Code, and such rights are hereby abolished in connection with prospectuses, but without prejudice to claims for damages or compensation against persons other than the company.

46.—(1) The following persons shall be liable to pay compensation to holders of shares or debentures issued under a prospectus for the loss they have sustained by reason of any material statement, promise or forecast therein which is false, deceptive or misleading, or by reason of the omission therefrom of any statement, report or account required to be contained in the prospectus by section 41 and the Fourth Schedule of this Ordinance, that is to say—

(a)   every person who was a director of the company at the time the prospectus was first issued ;

(b)   every person who authorised himself to be named and was named in the prospectus as a director, or as having agreed to become a director either immediately or after an interval of time ; and

(c)   every person who authorised the issue of the prospectus :

Provided that if a person has given a consent under section 47 of this Ordinance to the inclusion of an opinion or report by him in the prospectus, he shall not by reason of having given such a consent be liable as a person who authorised the issue of the prospectus, except in respect of the contents of or omissions from the opinion or report as it appeared in the prospectus.

(2) A person shall not be liable under subsection (1) of this section if he proves—

(a)   that having consented to become a director, he notified the company in writing that he withdrew his consent before the prospectus was first issued, and it was issued without his authority or consent; or

(b)   that the prospectus was issued without his authority or consent, and that on becoming aware of its issue and before the allotment of the shares or debentures in respect of which the action is brought, he notified the Registrar in writing that the prospectus was issued without his knowledge or consent and gave reasonable public notice to that effect; or

(c)   that after the issue of the prospectus and before the allotment of the shares or debentures in in respect of which the action is brought, he first became aware that a statement, promise or forecast therein was false, deceptive or misleading, or that a statement, report or account required to be contained therein had been omitted therefrom, and he forthwith notified the company and the Registrar in writing that he withdrew his consent to the allotment of shares or debentures under the prospectus and of his reasons for doing so, and gave reasonable public notice of the withdrawal of his consent and of his said reasons ; or

(d)   that—

(i) as regards all parts of the prospectus, other than an opinion or report in respect of which another person has given his consent under section 47, he had reasonable ground to believe, and did believe up to the time of the allotment of the shares or debentures in respect of which the action is brought, that it contained no statement, promise or forecast which was false, deceptive or misleading, and omitted no statement, report or account required to be contained therein ; and

(ii) as regards all parts of the prospectus in respect of which another person or other persons have given a consent or consents under section 47, that those parts set out the opinions and reports in the form in which the other persons had consented to their inclusion in the prospectus, and that he had reasonable grounds to believe, and did believe up to the time of the allotment of the shares or debentures in respect of which the action is brought, that the persons giving or making the opinions or reports were competent to make them and that none of them had withdrawn the consent given by him as aforesaid : Provided that this subsection shall not apply in the case of a person liable, by reason of having given a consent under section 47, as a person who authorised the issue of the prospectus in respect of the contents of or omissions from the opinion or report made by him as it appeared iq the prospectus.

(3) A person who, apart from this subsection, would be liable, by reason of having given a consent under section 47, as a person who authorised the issue of the prospectus in respect of a material statement, promise or forecast which was false, deceptive or misleading and was contained in an opinion or report made by him as it appeared in the prospectus, or in respect of the omission from such an opinion or report as it appeared in the prospectus of any matter required to be contained therein, shall not be liable if he proves—

(a)   that having given his consent under section 47 as aforesaid, he notified the company and the Registrar in writing that he withdrew his consent before a copy of the prospectus was delivered to the Registrar by the company ; or

(b)   that after delivery of a copy of the prospectus as aforesaid, and before the allotment of the shares or debentures in respect of which the action is brought, he first became aware that it contained a statement, promise or forecast which was false, deceptive or misleading, or that any matter required to be contained therein had been omitted therefrom, and he forthwith notified the company and the Registrar in writing that he withdrew his consent to the allotment of shares or debentures under the prospectus and of his reasons for doing so, and gave reasonable public notice of the withdrawal of his consent and of his said reasons ; or

(c)   that he was competent to give or make the opinion or report, and that he had reasonable ground to believe, and did believe up to the time of the allotment of the shares or debentures in respect of which he is sued, that the said opinion or report contained no statement, promise or forecast which was false, deceptive or misleading, and no matter required to be contained therein was omitted therefrom.

(4) Whereto the prospectus contains the name of a person as a director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent to become a director before the first issue of the prospectus, and has not authorised or consented to the issue thereof; or

(b) the consent of a person is required under section 47 to the issue of the prospectus and he has not given that consent, or has withdrawn it before the first issue of the prospectus;

the directors of the company, except any without whose knowledge or consent the prospectus was issued, and any other person who authorised the issue thereof shall be liable to indemnify the person named as aforesaid or whose consent was required as aforesaid, as the case may be, against all damages, compensation, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus, or of the inclusion therein of an opinion or report purporting to be made by him (as the case may be), or in defending himself against any action or legal proceedings brought against him in respect thereof :

Provided that a person shall not be deemed for the purposes of this subsection to have authorised the issue of a prospectus by reason only of his having given the consent required by section 47 to the inclusion therein of an opinion or report purporting to be made by him.

(5)  A company which has repaid the whole or part of the issue price of shares or debentures under section 45 shall thereafter be deemed to be the holder of the shares or debentures for the purpose of this section, and may within two years after the date of such repayment bring actions under this section against the persons mentioned in subsection (1), who may avail themselves of the defences mentioned in subsections (2) and (3).

(6)  The compensation recoverable under this section shall be the amount of the issue price paid up in respect of the shares or debentures in respect of which an action is brought, together with interest thereon from the dates on which the issue price or instalments of the issue price were paid at such rate as the court shall allow, not exceeding ten per centum per annum.

(7)  In this section the expression "holder of shares or debentures" has the same meaning as ithe expressions "shareholder" or "debenture holder" (as the case may be) in section 45, and subsections (3), (10) and (11) of section 45 shall apply to this section.

(8)  An action under this section may not be brought more than two years after the time when the shares or debentures to which it relates were allotted, but an action brought by a company under subsection (5) may be brought within the time limited by that subsection.

(9)  If judgment is given under this section against two or more persons, the court may order that one or more of them shall indemnify the other or others of them against the compensation ordered to be paid and the costs of the action, or that they shall make such contribution between themselves in respect of such compensation and costs as the court shall think just

(10)  Nothing in this section shall impose any vicarious or other liability on the company which issued the prospectus.

(11)  If the shares or debentures in respect of which an action is brought under this section have been transferred since they were issued, no defence which would be available if the action were brought by the allottee or any intermediate holder shall be available against the shareholder or debenture holder who brings the action.

(12)  In this section "reasonable public notice" means such individual communication or such advertisement, whether in a newspaper or otherwise, as is reasonably calculated to bring notice of the matter in question to the attention of the persons who have applied or may apply for shares or debentures under the prospectus.

(13)  The rights to sue for compensation conferred by this section shall be in substitution for all rights to sue persons liable under this section for damages or compensation under Articles 1382 and 1383 of the Civil Code, and such rights are hereby abolished in respect of the liability of those persons for misstatements in or omissions from prospectuses, but without prejudice to the rights of a company entitled to sue under subsection (5) of this section to enforce its rights under any contract of employment, or for services, or any other contract whatsoever.

47.—(1) When a copy of a prospectus is delivered to the Registrar under section 40, there shall be delivered with it : —

(a) the written consent of every person who has given an opinion or made a report which is set out, summarised, abstracted or quoted in the prospectus, to the inclusion in the prospectus of the opinion or report in the form in which it appears therein ;

(b)   a certificate signed by the directors of the company and proposed directors named in the prospectus that all the consents required by the foregoing paragraph have been delivered to the Registrar and have not been withdrawn, and that the opinions and reports in respect of which consents have been delivered appear in the prospectus in the form in which the persons giving the consents agreed to their inclusion ; and

(c)   a copy of the whole of every contract, report, account or opinion which is summarised, abstracted, quoted or referred to in the prospectus.

(2)  References in this Ordinance to reports, accounts or opinions shall include references to summaries and abstracts thereof and quotations therefrom.

(3)  The prospectus shall identify the parts thereof in respect of which consents have been delivered to the Registrar under this section, and the parts thereof which are summaries or abstracts of, or quotations from, contracts, reports, accounts and opinions, and shall state in clearly legible print that such consents and full copies of such contracts, reports, accounts and opinions may be inspected at the Companies Registry and at the company's registered office or at some other address in Seychelles given for the purpose, and copies thereof may be made by the person inspecting those documents'.

(4)  An offence is committed if a company—

(a)   does not deliver the consents, certificate and copies of contracts, reports and accounts required to be delivered to the Registrar by this section at the same time as the copy of the prospectus to which they relate ;

(b)   delivers a certificate to the Registrar under this section which is false ; or

(c)   issues a prospectus which omits any statement required by subsection (3); or

(d) fails to permit any person who has made a request for the purpose to inspect any of the documents mentioned in subsection (3) at its registered office or at the other address (if any) given in the prospectus as the address for inspection, or fails to permit such a person to take copies of the whole or any part of any such document.

(5)  If an offence is committed under the last foregoing subsection, every director of the company and every proposed director who has signed the copy of the prospectus delivered to the Registrar, shall be guilty of that offence, unless he satisfies the court that he did not participate or acquiesce in the commission of the offence, or that he made a mistake of fact in good faith and that if the facts had been as he believed them to be, no offence would have been committed.

(6)  A prosecution shall not be brought under this section against a company which issues a prospectus offering its own shares or debentures for subscription.

(7)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

48.—(1) If a company allots or agrees to allot shares or debentures with a view to all or any of them being offered for sale (whether directly or through another person or persons), any document by which the offer for sale is made shall for all purposes be deemed to be a prospectus issued by the company, and the provisions of this Ordinance as to the statements, reports and accounts required to be contained in prospectus, or in respect of omissions from a prospectus, or otherwise relating to prospectuses, shall apply accordingly as if the shares or debentures had been offered for subscription, and as if persons accepting the offer in respect of any shares or debentures had subscribed for them, but without prejudice to the liability of the persons by whom the offer for sale is made in respect of statements, promises or forecasts contained in the document and in respect of omissions therefrom.

(2) For the purposes of this Ordinance, it shall, unless the contrary is proved, be evidence that an issue or allotment, or an agreement to issue or allot shares or debentures was made with a view to the shares or debentures being offered for sale if it is shown : —

(«) that an offer of the shares or debentures or of any of them for sale was made within one year after the issue or allotment or agreement to issue or allot; or

(b) that at the date when the offer was made the whole consideration to be received by the company in respect of the shares or debentures had not been so received.

(3)  Section 41 as applied by this section shall have effect as if it required a prospectus to state in addition to the matters required by that section to be stated in a prospectus : —

(a)   the net amount of the consideration received or to be received by the company in respect of the shares or debentures to which the offer relates ; and

(b)   the place and time at which the contract under which the said shares or debentures have been, or are to be, allotted may be inspected ;

and section 40 as applied by this section shall have effect as though the persons making the offer were persons named in a prospectus as directors of a company.

(4)  Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document aforesaid is signed on behalf of the company or firm by two directors of the company or not less than half of the partners, as the case may be, and any such director or partner may sign by his agent authorised in writing.

(5)  Without prejudice to the generality of subsection (1), this section shall apply if a company allots or agrees to allot shares or debentures with a view to them being sold on a stock exchange by any member or members of the exchange, whether the shares or debentures are allotted or agreed to be allotted to him or them or to other persons.

49.—(1) If a company issues shares or debentures without issuing a prospectus, it shall deliver a statement (in this Ordinance called "a registration statement") to the Registrar at least twenty-eight days before the issue is made. The registration statement shall contain the statements and copies of the reports and accounts specified in Parts I and II of the Fourth Schedule to this Ordinance, and shall be signed by every director of the company and by every person who is named in it as a proposed director of the company.

(2)  If a company issues a prospectus which contains the statements required by Part I of the Fourth Schedule to this Ordinance, but not the statements and copies of the reports and accounts required by Part II of the Fourth Schedule, it shall, at least twenty-eight days before the prospectus is first issued, deliver to the Registrar a registration statement containing the statements and copies of the reports and accounts required by Part II of the Fourth Schedule, and the registration statement shall be signed by every director of the company and by every person who is named in it, or in the prospectus to which it relates, as a proposed director of the company.

(3)  Section 40(5) to (10) inclusive, section 41(3) to (5) inclusive and section 45, 46 and 47 of this Ordinance shall apply to a registration statement as they apply to a prospectus, and references in section 46 to a person who authorised the issue of a prospectus shall be construed as references to a person who authorised the delivery of a registration statement to the Registrar. Section 48 of this Ordinance shall apply to a registration statement as it applies to a document by which an offer for sale of shares or debentures is made.

(4)  An offence is committed if a company—

(a)   issues shares or debentures without delivering a registration statement to the Registrar in compliance with this section ; or

(b)   issues shares or debentures before the period specified in subsections (1) or (2) has expired, unless the Registrar has given an authorisation under section 40(7); or

(c)   issues shares or debentures after a prohibition order made by the Registrar under section 40(5) in relation to the registration statement has been served on it, unless the prohibition order has been revoked ; or

(d)   issues shares or debentures under a registration statement delivered to the Registrar which does not satisfy the requirements of subsection (1) or (2) of this section, as the case may be.

(5) If an offence is committed under subsection (4), every director of the company and every proposed director Who has signed the copy of any prospectus delivered to the Registrar shall be guilty of that offence,

unless he satisfies the court that he did not participate or acquiesce in the commission of the offence, or that he made a mistake of fact in good faith and that if the facts had been as he believed them to be, no offence would have been committed.

(6)  A prosecution shall not be brought under this section against a company which issues shares or debentures in respect of which a registration statement has been, or should have been, delivered to the Registrar.

(7)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

(8)  This section shall not apply to a proprietary company, nor to an invitation to subscribe for shares or debentures issued to not more than twenty-five persons, all of whom are either shareholders or debenture holders of the company.

50.—(1) Any person who by any statement, promise or forecast which he knows to be false, deceptive or misleading, or by recklessly making any statement, promise or forecast which is false, deceptive or misleading, induces or attempts to induce another person to enter into, or to offer to enter into, an agreement to subscribe for, underwrite, sell, purchase, exchange or surrender shares or debentures, or to create any derivative interest out of shares or debentures, shall be guilty of an offence.

(2)  For the purpose of this section a statement, promise or forecast is made recklessly if—

(a) it is made without belief that it is true, or in the case of a promise or forecast, that it is likely to be fulfilled ; or

{b) if a reasonable man who had the same knowledge of the surrounding circumstances as the accused, would not have believed that the statement was true, or that the promise or forecast was likely to be fulfilled.

(3)  This section shall apply whether the inducement or attempted inducement is contained in a prospectus, a document within section 48 of this Ordinance, or a registration statement, or in any other communication whether written or oral.

(4)  An offence under this section shall be punishable by a fine not exceeding one hundred thousand rupees, or

three times the value of the consideration obtained, or sought to be obtained, by the accused, whether for himself or another person (whichever is the greater), or by imprisonment for not more than seven years, or by both such fine or imprisonment.

(5) Any person guilty of conspiracy to commit an offence under this section shall be punishable as if he had committed such an offence.

51.—(1) A company shall within one month after allotting any of its shares or debentures deliver to the Registrar : —

(a) a return of allotments, stating the number of the shares or debentures comprised in the allotments, the names, addresses and descriptions of the allottees, the issue price of the shares or debentures and the amount paid up or credited as paid up on each share or debenture ; and

(b) in the case of shares or debentures allotted as fully or partly paid up otherwise than in cash, a copy of the contract in writing constituting the title of the allottee to the allotment together with a copy of the contract of sale, exchange or for the other consideration in respect of which that allotment was made, and a return stating the number of shares or debentures so allotted, the extent to which they are credited as paid up, and the consideration for which they have been allotted.

(2)  Where such a contract as above mentioned is not reduced to writing, the company shall within one month after the allotment deliver to the Registrar for registration the prescribed particulars of the contract.

(3)  If shares or debentures are allotted or agreed to be allotted with a view to all or any of them being offered for sale (whether by the allottee or through another person or persons), this section shall apply as if the shares or debentures had been allotted by the company to the first holders of them who do not take them with, a view to offering them for sale.

(4)  If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine not exceeding one hundred rupees for every day during the first month that default continues, two hundred and fifty rupees for every day during the next two months that default continues, and five hundred rupees for every day that default continues thereafter.

(5) Copies of contracts and the prescribed particulars of contracts delivered to the Registrar shall be deemed not to be writings for the purposes of the Mortgage and Registration Ordinance.