1. No person shall issue, circulate or distribute in India any prospectus offering for subscription in securities of a company incorporated or to be incorporated outside India, whether the company has or has not been established, or when formed will or will not establish, a place of business in India,
a. if, where the prospectus includes a statement purporting to be made by an expert, he has not given, or has before delivery of the prospectus for registration withdrawn, his written consent to the issue of the prospectus with the statement included in the form and context in which it is included, or there does not appear in the prospectus a statement that he has given and has not withdrawn his consent as aforesaid; or
b. if the prospectus does not have the effect, where an application is made in pursuance thereof, of rendering all persons concerned bound by all the provisions of sections 33 and 40, so far as applicable.
2. For the purposes of this section, a statement shall be deemed to be included in a prospectus, if it is contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.
Legal Commentary & Landmark Judgments: Section 388
Section 388 prohibits the circulation of a foreign company's prospectus containing statements by an expert without written consent and regulates the minimum subscription conditions governing the allotment of securities offered to Indian investors.
When representing investors in cross-border capital raising disputes, audit the expert valuation report incorporated in the foreign offering circular. If the expert withdrew consent before registration or held an undisclosed conflict of interest, move immediately for summary rescission and asset freezing under Section 388 read with Section 40.