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(c.) Qualification.-A director must acquire his qualifica- tion shares within two months of his appointment. If after that period he acts as a director without holding his qualification shares he is liable to a fine of $50 a day.
(d.) Prospectus.—The prospectus, or statement in lieu of prospectus, must contain the names, descriptions, and addresses of the directors or proposed directors, and no one can be named in the prospectus as a director or proposed director until he has filed with the registrar of companies a consent to act as such and a contract to take and pay for his qualification shares. The prospectus, or statement in lieu of prospectus, must be signed by every director or proposed director. It must contain full particulars of the interest of every director in the promotion or in the property to be acquired by the company, and a statement of all sums paid or agreed to be paid to him to induce him to become a director or for services in connection with
the promotion of the company. If the prospectus
contains misleading statements the onus is thrown on the director or promoter to prove that he had reason- able ground for believing, and did up to allotment believe, that the statements were true: at present the onus is on the subscriber to show that the director or promoter knew the statements to be false.
And even if the prospectus was issued, or the untrue statement was made, without his knowledge, he is still liable unless it is proved that on becoming aware of the issue of the prospectus or of any untrue statement therein, he forthwith gave reasonable public notice of the fact. (e.) Allotment.--Directors are liable civilly and criminally for breaches of the provisions as to allotment. (See the paragraph headed " Allotinent".)
(f.) Commencement of Business.-Directors are criminally liable for breaches of the restrictions on commence- ment of business. (See the paragraph headed “Com- mencement of Business ".)
(g.) Winding up.In a winding up by the court, the Official Receiver may report on the conduct of the directors and if he reports fraud the court may order them to be publicly examined. They have in any case to submit to the Official Receiver a statement, verified by affidavit, as to the affairs of the company. (See further the paragraph headed "Winding up by the Court".) (h.) Auditors.-The stricter duties thrown on the auditors by the Bill will also act as a check on the directors and promotors. (See the paragraph beaded "Audi- tors ".)
(i.) Generally throughout the Bill penalties are imposed on directors who are parties to contraventions of its provisions.
(1.) Relief-Power is given to the court to grant relief, wholly or in part, to directors charged with negligence or breach of trust, where the court thinks that they acted honestly and reasonably and ought fairly to be excused (Act of 1907).
Most of the special provisions relating to directors and pro- moters were introduced in the United Kingdom by the Directors Liability Act of 1890 or by the Companies Act of 1900. The reference given below are necessarily incomplete. Ordinance, Nil; Act, Sections 26, 72, 73, 75, 80 to 86, 147, 148, 175, 279 ; Bill, Clauses 27, 73, 74, 76, 81 to 87, 141, 142, 169, 258.
Prospectuses.
Under the present law, a prospectus must specify the dates and names of the parties to any contract which has been entered into by the directors or promoters, but there are no other statutory requirements whatsoever; and a subscriber who has been misled
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