Western Australian Consolidated Acts Western Australian Consolidated Acts (1) Where a prospectus
invites persons to subscribe for shares in or debentures of a
company —
(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,
shall, subject to
section 47(10), 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
therein, or in any report or memorandum appearing on the face thereof, or by
reference incorporated therein or issued therewith unless it is
proved —
(i)
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
(ii)
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
(iii)
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;
(iv)
that —
(a) 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
(b) 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:
Provided that a person
shall be liable to pay compensation as aforesaid if it is proved that he had
no reasonable ground to believe that the person making the statement, report
or valuation was competent to make it; and
(c) 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.
(2) Where 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, the directors of the
company, except any without whose knowledge or consent the prospectus was
issued, and any other person who authorised the issue thereof, shall be liable
to indemnify the person named as aforesaid 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 in defending himself against any legal
proceedings brought against him in respect thereof.
(3) Every person who,
by reason of his being a director or named as a director, or as having agreed
to become a director, or of his having authorised the issue of the prospectus,
or of his being a promoter, becomes liable to make any payment under this
section, may recover contribution as in cases of contract from any other
person who if sued separately would have been liable to make the same payment;
unless the person who has become so liable was, and that other person was not,
guilty of fraudulent misrepresentation.
(4) For the purposes
of this section —
the expression 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 who acted
solely in a professional capacity for persons engaged in procuring the
formation of the company:
the expression expert includes engineer, valuer,
accountant, geologist, and any other person whose profession gives authority
to a statement made by him.
(5) A person or
association of persons (whether corporate or otherwise) carrying on the
business of a banker, or an auditor, or a solicitor or a broker, shall not be
deemed to have authorised the issue of a prospectus or to have been a party to
the preparation of a prospectus merely because such person, association of
persons, auditor, solicitor, or broker, has consented to his or its name
appearing in such prospectus, and his or its name appears in such prospectus.