45.
| (1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debenture 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 in such prospectus, 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 authorized 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 authorized the issue of the prospectus : | | |
|
|
| (2) No person shall be liable under the provisions of subsection (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 in such prospectus, withdrew his:; consent thereto and gave reasonable public notice-of the withdrawal and of the reasons 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, as the case may be, 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 the provisions of section 41 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 a person in his official capacity or contained in what purports to be a copy of or extract from a public document issued officially, it was a correct and fair representation of the statement or copy or extract from the document: |
|
|
|
| (3) A person who, apart from the provisions of this s section, would under the provisions of subsection liable, by reason of his having given the consent required by the provisions of section 41 as a person who authorized the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert, not be so liable if he proves
| | (a) that, having given his consent under the provision of section 41 to the issue of the prospectus, withdrew it in writing before delivery of a copy c the prospectus for registration; or | | |
| | (b) that, after delivery of a copy of the prospectus registration and before allotment thereunder, on becoming aware of the untrue statement, drew his consent in writing and gave seasonal public notice of the withdrawal, and of the reason therefor ; or | | |
| | (c) that he was competent to make the statement ; that he had reasonable ground to believe and different up to the time of the allotment of the shares debentures, as the case may be, believe that statement was true. | | |
|
|
| (4) Where
| | (a) the prospectus contains the name of a person director of the company, or as having agreed to become a director of such company, and he has no consented to become a director or has withdraw his consent before the issue of the prospectus, and has not authorized or consented to the issue such prospectus ; or | | |
| | (b) the consent of a person is required under the provisions of section 41 to the issue of the prospectus a he either has not given that consent or has with drawn it before the issue of the prospectus, | | |
|
|
| (5) Every person who, by reason of his being a director or being named as a director or as having agreed to become a director, or of his having authorized the issue of the prospectus, or of the inclusion in such prospectus of a statement purporting to be made by him as an expert, 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. |
|
| (6) For the purposes of this section
| | (a) the expression "pro motor" means a pro motor 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) the expression "expert" has the same meaning as in section 41. | | |
|
|
|
Sri Lanka Consolidated Acts