# Statement by Experts in Prospectus

## Rule

A prospectus issued shall NOT include a statement made by an expert if any of the following is true:

1. The expert is engaged or interested in the formation, promotion, or management of the company; OR

2. The expert's written consent has not been obtained; OR

3. The expert had given written consent but has withdrawn it before delivery of a copy of the prospectus to the Registrar for filing.

## Who is an "Expert"? — Section 2(38)

The term "expert" includes:

An engineer
A valuer
A Chartered Accountant
A Company Secretary
A Cost Accountant
Any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force.

## Purpose of the Rule

Experts give investors comfort about technical/financial claims. To preserve independence and accountability:

An interested expert lacks independence → statement excluded.
Without written consent, the expert cannot be held responsible → statement excluded.
A withdrawn consent means the expert no longer stands behind the statement → cannot be included.

## Memory Hook

"Not interested, Consent obtained, Not withdrawn" — all three conditions must hold for an expert's statement to appear in a prospectus.

Worked example

### Example 1

Example 1 — Interested expert: A Chartered Accountant who is also a promoter of the company gives a statement on projected profits. Result: The statement cannot be included in the prospectus, since the expert is interested in the promotion of the company.

### Example 2

Example 2 — Withdrawn consent: A valuer gives written consent to include his valuation report in the prospectus. Two days before filing with ROC, he withdraws consent. The company still includes the statement. Result: This is a contravention of Section 26 — the statement should not have been included after consent was withdrawn.

### Example 3

Example 3 — Authority test: A medical doctor not authorised under any law to issue a certificate gives an opinion in the prospectus. Result: He is not an "expert" under Section 2(38), so the expert-restriction rules do not engage; but the statement is still subject to general truthfulness/disclosure provisions.

⚠️ Common exam mistakes

Treating only professionals (CA/CS/CMA) as experts — the definition is inclusive and covers anyone authorised to issue certificates under any law.
Assuming oral consent is sufficient — the Act specifically requires written consent.
Forgetting that the cut-off for withdrawal is delivery of the prospectus copy to the Registrar for filing, not the date of issue to public.

Bare-Act text Section 2(38) read with Section 26 · Companies Act, 2013 · click to expand

Section 2(38): 'expert' includes an engineer, a valuer, a Chartered Accountant, a Company Secretary, a Cost Accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force.

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Statement by Experts in Prospectus (Section 26 read with Section 2(38))

Worked example

⚠️ Common exam mistakes