3 The legal controls

Power to borrow — exercised by the board within the limits set by the articles or by the members in general meeting; a borrowing beyond the limit may be ultra vires the directors. Prospectus and disclosure — an offer of securities to the public must be made through a prospectus that discloses the company's affairs, capital structure, risk factors and the use of the proceeds. The sanction for a misleading prospectus is civil liability to subscribers and criminal liability. Registration of charges — a charge created by the company must be registered with the registrar within the prescribed period; an unregistered charge is void against the liquidator and creditors. Debenture-holders' remedies — enforcement of the security, appointment of a receiver, and, where the terms allow, the right to petition for winding up. Investor protection — the regulator supervises public issues, and the listing rules of the exchange impose continuing disclosure.