Business Studies
ASSERTION

A transferee of shares cannot sue the promoters of a company for misinformation in the prospectus.

REASON

The information provided by the company promoters in the prospectus is addressed only to the original allottees.


ANSWER

Both Assertion and Reason are correct and Reason is the correct explanation for Assertion


SOLUTION
The promoter is liable for untrue statements, made in the prospectus. A person, who subscribes for any shares or debenture in a company on the faith of the untrue statement contained in the prospectus, can sue the promoter for the loss or damages, sustained by the subscriber as the result of such untrue statement.
Legal Position of Promoters. In the eyes of law, a promoter is not an agent or a trustee of the company. He stands in a fiduciary relationship with the company he is promoting. Fiduciary relationship is the relationship based on trust and faith.
View Answers

You're just one step away

Create your Digital Resume For FREE on your name's sub domain "yourname.wcard.io". Register Here!


Assertion & Reason Medium Published on 18th 08, 2020
Next Question
Questions 244531
Subjects 8
Chapters 125
Enrolled Students 199
Enroll Now For FREE

Realted Questions

Q1 Single Correct Medium
The case of Salomon v A Salomon & Co Ltd established a number of principles. Which One of the following was NOT a principle established in Salomon case?

  • A. That a person who owns the vast majority of a companys shares is to be regarded as the principal of the company or that the company is trustee for his benefit.
  • B. That a companys promoters, directors and member could legitimately use corporate personality to shield themselves from certain liabilities.
  • C. That the minimum member requirement does not require the members to be active.
  • D. None of the above

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q2 Subjective Medium
Long Answer Type Questions: Explain the characteristics of global enterprise.

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q3 Single Correct Medium
Oil and Natural Gas Corporation, Indian Oil Corporation, Steel Authority of India, and Bharat Heavy Electrical are all examples of ______________.
  • A. small Scale Units
  • B. Private Sector Units
  • C. Public Sector Units
  • D. Sick Units

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q4 Single Correct Medium
Which of the following is an disadvantage of MNC ?
  • A. Harm the National Interests
  • B. Dominate Domestic Policies
  • C. Adverse Effects on Life Style/Culture
  • D. All of the above

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q5 Single Correct Medium
Benefits of joint ventures does not include ______________________.
  • A. access to new markets and distribution networks
  • B. sharing of risks and costs with a partner
  • C. access to greater resources, including specialized staff, technology and finance
  • D. the partners have different objectives for the joint venture

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer