# Remedies for Misrepresentation in the Prospectus
When a prospectus contains misleading statements or omissions, two categories of remedies arise:
## A. Remedies AGAINST the Company
### 1. Rescind the Contract
The allottee may set aside (rescind) the allotment contract with the company.
### 2. Application to Court
A person who took shares on the faith of a false prospectus may apply to the Court to:
- Have the contract set aside; and
- Have his name struck off from the register of members.
### 3. Claim Money Back
He may claim his subscription money back.
### 4. Sue for Damages (Deceit)
The allottee may sue the company for damages for deceit.
## Important Conditions / Loss of Right to Rescind
The allottee must act within a reasonable time and before winding up proceedings have commenced.
He loses the right to rescind if he:
- Attempts to sell the shares; or
- Attends a general meeting of the company; or
- Receives dividends.
## Right is Limited to Subscribers (Direct Allottees)
This right is available only to persons who subscribed to the shares — i.e., acquired shares directly from the company by allotment.
> A subsequent purchaser of shares from the open market has no remedy against the company, directors, or promoters under this head.
## B. Remedies AGAINST Directors / Promoters / Experts
| Type of Liability | Section |
|---|---|
| Criminal Liability for mis-statement | Section 34 |
| Civil Liability for mis-statement | Section 35 |
### Comparative Snapshot
| Feature | Criminal Liability (S.34) | Civil Liability (S.35) |
|---|---|---|
| Essential condition | Mens rea (guilty mind) | Loss or damage |
| Procedural law | Criminal Procedure Code, 1973 | Civil Procedure Code, 1908 |
| Nature of offence | Against the State | Against the counterparty |