This case is authority for the proposition that since the ordinary purpose of a prospectus is to invite persons to subscribe for shares or debentures once this is accomplished, the prospectus becomes exhausted and cannot be relied upon persons who deal with the shares thereafter.
In this case, all the shares of the company were allotted between July and October. The plaintiff bought 2,000 shares in December on the Stock Exchange. He sued the directors of the company on the ground that he had bought the shares reason of misrepresentation and suppression of material and important facts. It was held that the directors were not liable since the prospectus in question had already become exhausted when the plaintiff bought shares. He could not rely on it.