COMPANIES AND SECURITIES LEGISLATION (MISCELLANEOUS AMENDMENTS) ACT 1985 No. 192 of 1985 - SECT 191

COMPANIES AND SECURITIES LEGISLATION (MISCELLANEOUS AMENDMENTS) ACT 1985 No. 192 of 1985 - SECT 191

191. After section 65 of the Principal Act the following section is inserted:
Recommendations

"65A. (1) An adviser who -

   (a)  makes a recommendation with respect to securities or a class of
        securities to a person who may reasonably be expected to rely on the
        recommendation; and

   (b)  does not have a reasonable basis for making the recommendation to the
        person, contravenes this sub-section.

"(2) For the purposes of sub-section (1), an adviser does not have a
reasonable basis for making a recommendation to a person unless -

   (a)  the adviser has, for the purpose of ascertaining that the
        recommendation is appropriate having regard to the information
        possessed by the adviser concerning the investment objectives,
        financial situation and particular needs of the person, given such
        consideration to, and conducted such investigation of, the subject
        matter of the recommendation as is reasonable in all the
        circumstances; and

   (b)  the recommendation is based on that consideration and investigation.

"(3) An adviser who contravenes sub-section (1) is not guilty of an offence by
virtue of that sub-section or section 141.

"(4) Where -

   (a)  an adviser contravenes sub-section (1) by making a recommendation to a
        person;

   (b)  the person, in reliance on the recommendation, does a particular act,
        or refrains from doing a particular act;

   (c)  it is reasonable, having regard to the recommendation and all other
        relevant circumstances, for the person to do that act, or to refrain
        from doing that act, as the case may be, in reliance on the
        recommendation; and

   (d)  the person suffers loss or damage as a result of doing that act, or
        refraining from doing that act, as the case may be, the adviser is
        liable to pay damages to the person in respect of that loss or damage.

"(5) An adviser who -

   (a)  makes a recommendation with respect to securities or a class of
        securities to a person (in this sub-section referred to as the
        'client') who may reasonably be expected to rely on the
        recommendation; and

   (b)  in so making the recommendation, does not contravene sub-section (1),
        is not, in the absence of malice on the adviser's part, liable to an
        action for defamation at the suit of a person in respect of a
        statement made to the client by the adviser, whether orally or in
        writing, in the course of, or in connection with, the making of the
        recommendation to the client.

"(6) Sub-section (5) does not limit or affect any right, privilege or immunity
that an adviser has, apart from that sub-section, as defendant in an action
for defamation.

"(7) In this section -

   (a)  a reference to an adviser is a reference to a person who is a dealer,
        investment adviser, dealer's representative or investment
        representative; and

   (b)  a reference to the making of a recommendation is a reference to the
        making of a recommendation whether expressly or by implication.".