Section 313 - Civil remedy for mis-statements or omissions in a prospectus

(1) Where a prospectus published in connection with a general or restricted invitation to the public in respect of shares or debentures of a public company contains an untrue statement or omits to state any of the particulars or to set out any of the reports which, under this Act, it is required to state or set out, subject to this section, a person specified in subsection (2) is liable to pay compensation to the persons who acquire or dispose of the shares or debentures on the faith of the prospectus for the loss they may have sustained by reason of the untrue statement or omission.

(2) Subject to this section, the following persons are liable to pay compensation in accordance with subsection (1):

(a) a person making the invitation to which the prospectus relates;

(b) a person who was a director of a body corporate making the invitation at the time when the prospectus was published;

(c) where the invitation was made by the company to whose shares or debentures the invitation relates,

(i) a person who has personally authorised to be named and is named in the prospectus as a director or as having agreed to become a director, immediately or after an interval of time; or

(ii) a promoter of the company who was a party to the preparation of the prospectus; and

(d) a person who, pursuant to section 307 has consented to the publication of the prospectus containing a statement by that person as an expert.

(3) A person is not liable under subsections (1) and (2) if that person proves

(a) that as regards an untrue statement, not purporting to be made on the authority of an expert, other than that person, or of a public official document or statement, that person had reasonable grounds to believe and did believe up to the time of the publication of the prospectus or, where a waiting period applies, up to the expiration of the waiting period, that the statement was true;

(b) that as regards an omission, that person was not cognisant of the omission up to the time of the publication of the prospectus or, where a waiting period is applicable, up to the expiration of the waiting period;

(c) that as regards an untrue statement purporting to be a statement by an expert, other than that person, or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation, and that that person had reasonable grounds to believe and did believe up to the time of the publication of the prospectus that the person making the statement was competent to make it and had given the consent required by section 307 and had not withdrawn that consent before the date of registration of the prospectus;

(d) that as regards an untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document;

(e) that after the publication of the prospectus but before the expiration of a waiting period that person, on becoming aware of an untrue statement in the prospectus or omission from the prospectus withdrew the consent given to the prospectus and gave reasonable public notice of the withdrawal and of the reason for the withdrawal; or

(f) that the prospectus was published without the knowledge of, and that, on becoming aware of the publication, that person forthwith gave reasonable public notice that it was published without the knowledge of that person.

(4) A person specified in subparagraph (i) of paragraph (c) of subsection (2) is not liable under subsections (1) and (2) if that person proves that having consented to being named as a director or as having agreed to become a director the consent was withdrawn before the registration of the prospectus and that it was published without the authority or consent of that person.

(5) A person specified in paragraph (d) of subsection (2) is not liable under subsections (1) and (2) of this section,

(a) if the untrue statement or omission was not made by that person;

(b) if that person proves

(i) that as regards an untrue statement made by that person, that person was competent to make the statement and had reasonable grounds to believe and did believe, up to the date of publication of the prospectus or, where a waiting period applies, up to the expiration of the waiting period, that the statement was true;

(ii) that having given the consent under section 307 that person withdrew the consent in writing before delivery of the prospectus for registration; or

(iii) that, after delivery of the prospectus for registration but before publication of the prospectus, or, where a waiting period applies, before the expiration of the waiting period, that person, on becoming aware of the untrue statement or omission, withdrew the consent in writing and gave reasonable public notice of the withdrawal, and of the reason for the withdrawal.

(6) Where,

(a) a person is named in a prospectus as a director of a company or as having agreed to become a director of a company, and that person has not consented to become a director or has withdrawn that consent before the publication of the prospectus and has not authorised or consented to the publication, or

(b) the consent of a person is required under section 307 to the publication of the prospectus and that person has not given that consent or has withdrawn the consent before the publication of the prospectus,

a person making the invitation to which the prospectus relates and a person who was a director of a body corporate making the invitation at the time when the prospectus was published, except a person without whose knowledge or consent the prospectus was published, is liable to indemnify the person referred to in paragraph (a) or (b) of this subsection against the damages, costs and expenses to which that person may be made liable by reason of the name having been inserted in the prospectus or of the inclusion in the prospectus of a statement purporting to be made by that person as an expert, or in contesting legal proceedings brought against that person in respect of the prospectus.