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COMPANIES ACT (NORTHERN IRELAND) 1960 - SECT 43

Civil liability for mis-statements in prospectus.

43.(1) Subject to the provisions of this section, where a prospectus invites
persons to subscribe for shares in or debentures of a company, the following
persons shall be liable to pay compensation to all persons who subscribe for
any shares or debentures on the faith of the prospectus for the loss or damage
they may have sustained by reason of any untrue statement included therein,
that is to say:

(a)every person who is a director of the company at the time of the issue of
the prospectus;

(b)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;

(c)every person being a promoter of the company; and

(d)every person who has authorised the issue of the prospectus.

(2) Where, under section forty, the consent of a person is required to the
issue of a prospectus and he has given that consent, he shall not by reason of
his having given it be liable under sub-section (1) as a person who has
authorised the issue of the prospectus except in respect of an untrue
statement purporting to be made by him as an expert.

(3) Subject to sub-section (4), no person shall be liable under sub-section
(1) if he proves

(a)that, having consented to become a director of the company, he withdrew his
consent before the issue of the prospectus, and that it was issued without his
authority or consent; or

(b)that the prospectus was issued without his knowledge or consent, and that
on becoming aware of its issue he forthwith gave reasonable public notice that
it was issued without his knowledge or consent; or

(c)that, after the issue of the prospectus and before allotment thereunder,
he, on becoming aware of any untrue statement therein, withdrew his consent
thereto and gave reasonable public notice of the withdrawal and of the reason
therefor; or

(d)that

(i)as regards every untrue statement not purporting to be made on the
authority of an expert or of a public official document or statement, he had
reasonable ground to believe, and did up to the time of the allotment of the
shares or debentures, as the case may be, believe, that the statement was
true; and

(ii)as regards every untrue statement purporting to be a statement by an
expert 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 he had
reasonable ground to believe and did up to the time of the issue of the
prospectus believe that the person making the statement was competent to make
it and that person had given the consent required by section forty to the
issue of the prospectus and had not withdrawn that consent before delivery of
a copy of the prospectus for registration or, to the defendant's knowledge,
before allotment thereunder; and

<(iii)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.


(4) Sub-section (3) shall not apply in the case of a person liable, by reason
of his having given a consent required of him by section forty, as a person
who has authorised the issue of the prospectus in respect of an untrue
statement purporting to be made by him as an expert.

(5) A person who, apart from this sub-section would under sub-section (1) be
liable, by reason of his having given a consent required of him by section
forty, as a person who has authorised the issue of a prospectus in respect of
an untrue statement purporting to be made by him as an expert shall not be so
liable if he proves

(a)that, having given his consent under9 slf4001that, having given his consent
under section forty to the issue of the prospectus, he withdrew it in writing
before delivery of a copy of the prospectus for registration; or

(b)that, after delivery of a copy of the prospectus for registration and
before allotment thereunder, he, on becoming aware of the untrue statement,
withdrew his consent in writing and gave reasonable public notice of the
withdrawal, and of the reason therefor; or

(c)that he was competent to make the statement and that he had reasonable
ground to believe and did up to the time of the allotment of the shares or
debentures, as the case may be, believe that the statement was true.

(6) Subject to sub-section (7), where

(a)the prospectus contains the name of a person as a director of the company,
or as having agreed to become a director thereof, and he has not consented to
become a director, or has withdrawn his consent before the issue of the
prospectus, and has not authorised or consented to the issue thereof; or

(b)the consent of a person is required under section forty to the issue of the
prospectus and he either has not given that consent or has withdrawn it before
the issue of the prospectus;

(7) A person shall not be deemed for the purposes of sub-section (6) to have
authorised the issue of a prospectus by reason only of his having given the
consent required by section forty to the inclusion therein of a statement
purporting to be made by him as an expert.

(8) For the purposes of this section

(a)"promoter" means a promoter who was a party to the preparation of the
prospectus, or of the portion thereof containing the untrue statement, but
does not include any person by reason of his acting in a professional capacity
for persons engaged in procuring the formation of the company; and

(b)"expert" has the same meaning as in section forty.

© 1960 Crown Copyright

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