Examine the criminal liability in respect of prospectuses.

It is a criminal offence to issue any form of application for shares or debentures of a company unaccompanied a prospectus. A person guilty of this offence is liable to a fine not exceeding Kshs10,000.

It is a criminal offence to issue a prospectus containing a statement purporting to have been made an expert without such expert‟s written consent. A prospectus issued in contravention thereof renders the company and every person who was knowingly a party to the issue liable to a fine not exceeding Kshs10,000.

It is a criminal offence to issue a prospectus before a copy thereof has been delivered to the registrar for registration. A prospectus issued in contravention thereof renders the company and every person who was knowingly party to the issue liable to a fine not exceeding Kshs100 until a copy thereof is delivered.

It is a criminal offence to deliver an unendorsed copy of a prospectus to the registrar for registration. A prospectus delivered in contravention thereof renders the company and every person who was knowingly a party to the delivery liable to a fine not exceeding Kshs100.

It is a criminal offence to deliver to the registrar for registration a copy of a prospectus without the necessary annextures. A prospectus delivered in contravention thereof renders the company and every person who was knowingly a party to the delivery liable to a fine not exceeding Kshs100 for every day.

It is a criminal offence to authorize the issue of a prospectus containing any untrue statement. Any person guilty of so doing is liable to imprisonment for a term not exceeding 2 years or a fine not exceeding Kshs10,000 or both. However, the accused escapes liability proving either that:

– The statement was immaterial
– He had reasonable ground to believe and did believe up to the time of issue of the prospectus that the statement was true.

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