COMPANIES ACT - 1963 (ACT 179)

    Section - 286 - Civil Remedy for Mis-statements or Omissions in a Prospectus

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

    (2) Subject to the provisions of this section, the following persons shall be liable to pay compensation in accordance with subsection (1) of this section, namely,

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

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

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

    (d) every person who, pursuant to section 278 of this Code, has consented to the publication of the prospectus containing a statement by him as an expert.

    (3) No person shall be liable under the foregoing subsections of this section if he proves,

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

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

    (c) that as regards every untrue statement purporting to be a statement by an expert, other than himself, 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 he 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 278 of this Code and had not withdrawn that consent before the date of registration of the prospectus;

    (d) that as regards every 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 any waiting period he, on becoming aware of any untrue statement therein or omission therefrom, withdrew his consent thereto and gave reasonable public notice of the withdrawal and of the reason therefor; or

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

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

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

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

    (b) if he proves,

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

    (ii) that having given his consent under section 278 of this Code he withdrew it in writing before delivery of the prospectus for registration; or

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

    (6) Where,

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

    (b) the consent of a person is required under section 278 of this Code to the publication of the prospectus and he either has not given that consent or has withdrawn it before the publication of the prospectus,

    every person making the invitation to which the prospectus relates and every person who was a director of any body corporate making the invitation at the time when the prospectus was published, except any without whose knowledge or consent the prospectus was published, shall be liable to indemnify the person referred to in paragraph (a) or (b) of this subsection against all damages, costs, and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, or in defending himself against any legal proceeding brought against him in respect thereof.