The Short Title of this Act is “The Promoters’ and Directors’ Liability Act, 1891.”

This Act shall apply to or in respect of a company formed or registered, or intended to be formed or registered, under the provisions of “The Companies Act, 1882,” or to a company formed or registered, or intended to be formed or registered, under the provisions of “The Mining Companies Act, 1886,” or formed or intended to be formed under any other Act of the General Assembly now or hereafter in force, and the provisions of this Act shall be construed in accordance with the Act under which the company is created, formed, or registered, or intended to be created, formed, registered, or constituted, as the case may require.

Where, after the passing of this Act, a prospectus or notice invites persons to subscribe for shares in or debentures or debenture-stock of a company, every person who is a director of the company at the time of the issue of the prospectus or notice, and every person who, having authorised such naming of him, is named in the prospectus or notice as a director of the company, or as having agreed to become a director of the company either immediately or after an interval of time, and every promoter of the company, and every person who has authorised the issue of the prospectus or notice, shall be liable to pay compensation to all persons who shall subscribe for any shares, debentures, or debenture-stock on the faith of such prospectus or notice for the loss or damage they may have sustained by reason of any untrue statement in the prospectus or notice, or in any report or memorandum appearing on the face thereof, or by reference incorporated therein or issued therewith, unless it is proved,—

or unless it is proved that, having consented to become a director of the company, be withdrew his consent before the issue of the prospectus or notice, and that the prospectus or notice was issued without his authority or consent, or that the prospectus or notice was issued without his knowledge or consent, and that on becoming aware of its issue be forthwith gave reasonable public notice that it was so issued without his knowledge or consent, or that after the issue of such prospectus or notice, and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent thereto, and caused reasonable public notice of such withdrawal, and of the reason therefor, to be given.

A “promoter” in this section means a promoter who was a party to the preparation of the prospectus or notice, or of the portion thereof containing such untrue statement, but shall not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company.

Where any company existing at the passing of this Act, which has issued shares or debentures, shall be desirous of obtaining further capital by subscriptions for shares or debentures, and for that purpose shall issue a prospectus or notice, no director of such company shall be liable in respect of any statement therein unless he shall have authorised the issue of such prospectus or notice, or have adopted or ratified the same.

In this section the word “expert” includes any person whose profession or occupation, or assumed profession or occupation, gives authority to a statement made by him.

Every action or other legal proceeding under this section shall be commenced within three years after the cause of action shall have arisen, and not afterwards.

Where any such prospectus or notice as aforesaid contains the name of a person as a promoter or director of the company, or as having agreed to become a promoter or director thereof, and such person has not consented to become a promoter or director, or has withdrawn his consent before the issue of such prospectus or notice, and has not authorised or consented to the issue thereof, the promoters or directors of the company, except any without whose knowledge or consent the prospectus or notice was issued, and any other person who authorised the issue of such prospectus or notice, shall be liable to indemnify the person named as a promoter or director of the company, or as having agreed to become a promoter or director thereof as aforesaid, against all damages, costs, charges, and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or notice, or in defending himself against any action or legal proceedings brought against him in respect thereof.

Every person who, by reason of his being a promoter or director, or named as a promoter or director, or as having agreed to become a promoter or director, or of his having authorised the issue of the prospectus or notice, has become liable to make any payment under the provisions of this Act, shall be entitled to recover contribution, as in cases of contract, from any other person who, if sued separately, would have been liable to make the same payment.

Every action or other legal proceeding under this section shall be commenced within three years after the liability to contribute shall have arisen, and not afterwards.

If any person shall knowingly and wilfully insert, or cause to be inserted, in any prospectus or notice inviting persons to subscribe for shares or debentures or debenture-stock of a company, the name of any other person, whether as director, broker, or solicitor, without the express authority in writing of the person whose name appears on such prospectus, the person so offending shall be deemed guilty of a misdemeanour, and on conviction thereof shall be liable to be imprisoned for any term not exceeding three years with or without hard labour, or, at the discretion of the Court before which such conviction shall be had, may be adjudged to pay a fine not exceeding one hundred pounds.

The foregoing provisions shall not prejudice or affect any other liability imposed by or under this Act.

If any person being an engineer, valuer, accountant, or other “expert,” within the meaning of the third section of this Act, knowingly and wilfully makes, signs, or gives, or causes to be made, signed, or given, any false assay, certificate, report, valuation, or other document whatsoever relating to or setting forth the capacity, productiveness, quality, or capability of any matter or thing respecting the objects or purposes for which any company is formed or is intended to be formed, or, knowing the same to be false, shall issue, utter, offer or dispose of any such assay, certificate, report, valuation, or other document whatsoever as aforesaid, he shall be deemed guilty of a misdemeanour, and on conviction thereof shall be liable to be imprisoned with or without hard labour for any term not exceeding three years.

Every prosecution or other criminal proceedings for any offence under sections six or seven of this Act shall be commenced or taken within three years after the alleged offence shall have been committed, and not afterwards.