# Section 35 — Civil Liability for Misstatements
## A. Compensating the Loss
If a person suffers loss by acting on a misleading statement or omission in the prospectus, the following are liable to compensate:
1. The Company;
2. Every Director at the time of issue;
3. Every Proposed Director named in the prospectus;
4. Every Promoter of the company;
5. Every Expert whose statement is included;
6. Every person who authorized the issue of the prospectus.
## B. Defenses — Exceptions to Liability
A person shall not be liable if they prove any of the following:
1. They withdrew consent before the prospectus was issued, and it was issued without their authority or consent;
2. They gave public notice that the prospectus was issued without their knowledge or consent;
3. They relied on an expert's authority, believing the expert's statement to be true and the expert was competent.
## C. Unlimited Liability for Fraud
If the prospectus was issued with fraudulent intent to deceive investors:
- Those responsible are personally liable for all losses;
- There is no limitation of liability.
## Civil vs Criminal — Quick Compare
| Aspect | Sec 34 (Criminal) | Sec 35 (Civil) |
|---|---|---|
| Trigger | Untrue/misleading statement | Loss suffered by subscriber |
| Liability | Sec 447 — fraud (jail + fine) | Compensation to subscriber |
| Loss required? | No | Yes |
| Defenses | Immaterial / reasonable belief | Withdrawal, public notice, expert reliance |
| Fraud case | Always liable under 447 | Personal unlimited liability |
## Practical Takeaway
Sec 35 is about money back to the investor. Sec 34 is about punishment of the wrongdoer. Both can run simultaneously — they are not mutually exclusive.