PROSPECTUS AND ALLOTMENT 49
money subscribed is returnable to the subscribers without
interest, and if any of the money has not been returned
within forty-eight days from the issue, the directors are
jointly and severally liable to return it with interest at 5 per
cent. from the forty-eighth day. = A director, however, is not
liable, if he proves that the default was not due to any
misconduct or negligence on his part. Any provision
binding an applicant to waive compliance with this sub-
section is void, [s. 39 (5)] S. 39 (4) only applies before
allotment has taken place; after allotment the only remedies
available are under s. 41 [Burton v. Bevan (1908), 2 Ch. 240].

S. 39 does not apply to any allotment of shares subsequent
to the first allotment of shares offered to the public, [s. 39 (6).]
S. 41 (1) provides that an allotment made, in the case of a
company making a public issue of shares without the
minimum subscription being subscribed, or the necessary
application money received, or, in the case of a company
not issuing a prospectus or not having allotted any of the
shares offered for public subscription, without a statement
in lieu of prospectus being delivered to the Registrar, may be
voidable by the applicant at any time up to one month from
the holding of the statutory meeting or, where the company is
not required to hold a statutory meeting or the allotment
is made after the statutory meeting, within one month
from the date of allotment, notwithstanding that the company
may be in liquidation. Notice of avoidance within the month,
followed by prompt legal proceedings, is sufficient; the
proceedings need not be actually commenced within the
month [National Motor Mail Coach (1908), 2 Ch. 228].
Under the Act of 1go8 it was held that the limit of one
month did not apply to companies registered before the Act
of 1900, and making a public issue after the Act, since such
companies could not hold a statutory meeting. Consequently
it was held that in such cases an irregular allotment could
be avoided at any time [Finance and Issue v. Canadian
Produce Corporation (1905), 1 Ch. 37]. This cannot arise
under the new Act, as express provision is made to meet the
case of a company not required to hold a statutory meeting.
By s. 41 (2) a director who knowingly contravenes, or
permits or authorises an allotment in contravention of any
of the provisions of sections 39 or 40 is liable to compensate
both the company and the allottee for any loss, damages or
costs sustained or incurred thereby. Proceedings to recover
any such loss, damages or costs must be commenced within
two years from the date of the allotment. It would appear
that the amount of damages to which an allottee is entitled