Directors, and c Liability Act 1890 (SA)

ANNO QUINQUAGESIMO TERTIO ET QUINQUA-

GESIMO QUARTO

VICTORIB REGINA.

A.D. 1890.

No. 487.

An Act to amend the Law relating to the Liability of

Directors and Promoters of Companies.

[Assented to, Decembe~ 23rd, 1890.1

HEREAS it is expedient to amend the law relating to the heamble.

W liability of directors and promoters of Companies-Be it	therefore Enacted by the Governor of the Province of South
Australia, with the advice and consent of the Legislative Council and House of Assembly of the said province, in this present Parliament assembled, as follows:

1, This Act may be cited as ': The Directors and Promoters Lia- sho*titl*.

bility Act, 1890."

Liabiity for state-

I. Where, after the passing of this Act, a prospectus or notice invites nersons to subscribe for shares in or debentures or debenture I stock of a company, every person who is n director or provisional director of the company at the time of the issue of the prospectus or notice, and every person who, having authorised such naming of him, is named in the prospectus or notice as a director or provisional director of the company, or as having ctgreed to become a director of the company, either immediately or after an interval of time, and every promoter of the company, shall be liable to pay compensation to all persons who shall subscribe for any shares, debentures, or pmpeatus.

2.

debenture stock on the faith of such prospectus or notice for the l o s ~

or damage they may have sustained by reason of any untrue or misleading statement in the prospectus or notice, or in any report or memorandum appearing on the face thereof, or bp reference incorporated therein or issued therewith, unless it is proved-

487 (a) With

53' & 54' VICTORIE, No. 487.

The Directors and Promoters Liability Act.-1 89 0.

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

( b ) With respect to every such untrue or misleading statement, purporting to be a statement by or contained in what pur- ports to be a copy of or extract from s report or valuation

of an engineer, valuer, accountant, or other expert, that it

fairly represented the s taternent made by such engineer, valuer, accountant, or other expert, or was a correct and fair copy of or extract from the report or valuation: Pro- vided always that, notwithstanding that such untrue or misleading statement fairly rcprewnted the statement made by such engineer, valuer, aocountant, or other expert, or was a correct and fair copy of an extract from the report or valuation, such director, person named, or promoter who authorised the issue of the prospectus or notice as aforesaid shall be liable to pay compensation as aforesaid if it be proved that hc had no reasor~able ground

to believe that the person making the statement, report, or

valuation was competent to make i t; and

(c) With respect to every such untrue or misleading rtatemcnt, 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 that it was a correct and fair representat,ion of such statement or copy of or extract from such document:

Or unless it is provcd that, having consented to become a director of the company, he withdrew his consent before the issue of the prospectus or notice, and that the prospectus or notice was issued without his authority or consent, or that the prospectus or notice

was issued without his knowledge or consent, and that on becoming

aware of its issue he forthwith gave reasonable public notice that it

was so issued without his knowledge or consent, or that, after the issue of such prospectus or notice and beforc allotment thereunder,

he, on becoming aware of any untrue or misleading statement

therein, withdrew his consent thereto, ancl caused reasonable public

notice of such withdrawal, and of the reason therefor, to be given.

11. A promoter in this section means a promoter who was a party to the preparation of the prospectus or notice, or of the portion

thereof containing such untrue or misleading statement, but shall

not include any person by reason of his acting in a professional capacity for persons engagcd in procuring the formation of the company.

m. Where any company existing at the passing of this Act,

which has issued shares or debentures, shall be desirous of obtaining

further

53' & 5 4 O VICTORIAE, No. 487.

The Directors and Promoters Liability Act.--1 890.

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further capital by subscription for shares or debentures, and for that pupose shall issue a prospectus or notice, no director of such com- pany shall be liable in respect of any statement therein unless he shall have authorised the issue of such prospectus or notice or have adopted or ratified the same.

IV. In this section the word '' expert " includes any person whose

profession gives authority to a statement made by him.

3, Where any such prospectus or notice as aforesaid contains the hdemnity where

name of a person as a director, provisional director, or promoter of b,nimpprly name of person has

the company, or as having agreed to become a director, provisional iuaerted a m dmctor.

director, or promoter thereof, and such person has not consented to

become a director, provisional director, or promoter, or has with-

drawn his consent before the issue of such prospectns or notice, and

has not authorised or consented to the issue thereof, the directors,

provisional ctircctors, or promoters of the company, except any

without whose knowledge or consent the prospectus or notice was

issued, and any other person who authorised the issue of such

prospectus or notice, shall be liable to indemnify the person named

as a director, provisional director, or promoter of the company, or

as having agreed to become a director, provisional director, or pro-

moter thereof as aforesaid, against all damages, costs, charges, and

expenses to which hc may be made liable by reason of his name

having been inserted in the prospectus or notice, or in defending

himself against any action or legal proceedings brought against him

in respect thereof.

4, Every person who, by reason of his being a director, pro- 00-directors, Contribution &c. from

visional director, or promoter, or namcd as a director, provisional director, or promoter, or as having agreed to become a director, pro- visional director, or promoter, or of his having authorised the issue

of the prospectus or notice, has become liable to make any payment

under the provisions of this Act, shall be entitled to recover con-

tribution, as in cases of contract, from any other person who, if sued separately, would have been liable to make the same payment. until the first day of January, one thousand eight hundred and sections 2, 3, 4. 5, Sections 2, 3, and 4 of this Act shall not come into operation commencementof

nmety-one.

In the name and on behalf of Her Majesty, I hereby assent

t h i ~ Rill.

KINTORE, Governor.

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Adelaide : By authority, C. E. BRIBTOW, Government Printer, North-terrace.