# Provisions as to Expert's Consent and Allotment [Section 388]

## Applicability

A prospectus offering securities of a company incorporated outside India (whether or not having place of business in India).

## When Prospectus shall NOT be Issued

### Situation 1: Issues with Expert Statement

If the prospectus includes an expert statement which is:

Not given by such expert, OR
The expert withdrew his written consent before delivery of prospectus for registration, OR
The prospectus does not include a statement that the expert has given his consent and that he has not withdrawn it.

### Situation 2: Non-compliance with Other Provisions

If the prospectus does not comply with:

Section 33 — Issue of Application Forms, and
Section 40 — Securities to be dealt in on a Recognised Stock Exchange.

## Deemed Inclusion of Expert Statement

An expert statement is deemed to be included in the prospectus if it is contained in:

Any report or memorandum appearing on the face of the prospectus, or
A statement included by reference in the prospectus.

## Practical Significance

This protects investors from misleading prospectuses where expert opinion is fabricated or stale.
It ensures regulatory compliance (Section 33 and Section 40) which are also applicable to Indian companies.

Worked example

### Example 1

Example: A foreign company's prospectus quotes an audit report by a US CPA. The CPA withdrew written consent two days before the prospectus was filed with ROC. The prospectus cannot legally be issued in India under Section 388 — the withdrawal of consent before delivery for registration triggers the prohibition.

⚠️ Common exam mistakes

Believing 'consent withdrawal' must be after registration — Section 388 catches withdrawal before delivery for registration too.
Overlooking that a statement appearing 'by reference' is also deemed included — i.e., merely citing an expert report invites Section 388 scrutiny.
Forgetting that Section 33 (application forms) and Section 40 (listing) apply independently.

Reference: Section 388 — Companies Act, 2013

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Expert's Consent and Allotment (Section 388)

Worked example

⚠️ Common exam mistakes