Companies Act, 1973 (Act No. 61 of 1973)

Chapter VI: Offering of Shares and Prospectus

Prospectus

161. Liability of experts and others
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1)Where the consent of any person is required under section 151 and he has given that consent-
a)he shall not, by reason of his having given it, be liable as a person who has authorised the issue of the prospectus either--
i)under section 160(1) or (2) to compensate persons subscribing or purchasing on the faith of the prospectus, except in respect of any untrue statement purporting to be made by him as an expert; or
ii)under section 160 (4) to indemnify any person against liability under the said section 160(1) or (2); but
b)he shall, in respect of any untrue statement purporting to be made by him as an expert, be liable under the said section 160(1) or (2), unless one of the following things (which shall in his case be in lieu of the grounds of defence available to others by virtue of section 160(3)), is proved, namely-
i)that having given his consent as aforesaid he withdrew it in writing before lodgment of a copy of the prospectus for registration; or
ii)that after lodgment of a copy of the prospectus for registration and before allotment thereunder to, or before acceptance thereunder by, the person complaining, 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
iii)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 the acceptance of the offer, as the case may be, believe that the statement was true.

 

2)Where under section 151 the consent of any person is required to the issue of a prospectus, and he either has not given that consent or has withdrawn it before the issue of the prospectus, he shall be entitled to indemnity under section 160 as if he had without his consent been named in the prospectus as a director of the company.