Singapore legislation

Clause 11

Repeal and re-enactment of section 55 and new sections 55A and 55B

Section 55 of the Companies Act is repealed and the following sections substituted therefor:“Civil liability for false or misleading statements and omissions55.—

(1)

Where an offer or invitation in respect of shares or debentures, or units of shares or debentures, is made under a prospectus or a profile statement and —

(a)

a false or misleading statement is contained in —

(i)

the prospectus or the profile statement; or

(ii)

any application form that is in or accompanies the prospectus or the profile statement;

(b)

there is an omission to state any information required to be disclosed under section 45 in respect of the prospectus, or under section 45A in respect of the profile statement; or

(c)

there is an omission to state a new circumstance that —

(i)

has arisen since the prospectus or the profile statement was registered by the Registrar; and

(ii)

would have been required by section 45 to be included in the prospectus, or by section 45A to be included in the profile statement, if it had arisen before the prospectus or the profile statement was registered,the persons referred to in subsection (3) shall be liable to compensate any person who suffers loss or damage as a result of the false or misleading statement in or omission from the prospectus or the profile statement, even if such persons were not involved in the making of the false or misleading statement or the omission.(2) For the purposes of subsection (1), a false or misleading statement about a future matter (including the doing of, or the refusal to do, an act) is taken to have been made if a person makes the statement without having reasonable grounds for making the statement.(3) The persons liable are —

(a)

the person making the offer or invitation to the public;

(b)

if the offer or invitation is made by a corporation, each director of the corporation;

(c)

a person named in the prospectus or the profile statement with his consent as a proposed director of the corporation;

(d)

an underwriter (but not a sub-underwriter) to the issue or sale of the shares or debentures, or units of shares or debentures, named in the prospectus or the profile statement with his consent;

(e)

a person named in the prospectus or the profile statement with his consent as having made a statement —

(i)

that is included in the prospectus or the profile statement; or

(ii)

on which a statement made in the prospectus or the profile statement is based,but only in respect of the inclusion of that statement; and

(f)

a person who made the false or misleading statement, or omitted to state the information or circumstance, as the case may be.(4) A person who acquires shares or debentures, or units of shares or debentures, as a result of an offer or invitation that was made in or accompanied by a profile statement is taken to have acquired the shares or debentures, or units of shares or debentures, in reliance on both the profile statement and the prospectus for the offer.(5) An action under subsection (1) may begin at any time within 6 years after the day on which the cause of action arose.(6) This section shall not affect any liability that a person has under any other law.Persons liable to inform person making offer or invitation about certain deficiencies55A.—

(1)

A person referred to in section 55(3) shall notify in writing the person making an offer or invitation in respect of shares or debentures, or units of shares or debentures, as soon as practicable, if he becomes aware during the application period that —

(a)

a material statement in the prospectus or the profile statement is false or misleading;

(b)

there is a material omission from the prospectus of material required by section 45, or from the profile statement of material required by section 45A; or

(c)

a material new circumstance —

(i)

has arisen since the prospectus or the profile statement was registered by the Registrar; and

(ii)

would have been required by section 45 to be included in the prospectus, or by section 45A to be included in the profile statement, as the case may be, if it had arisen before the prospectus or the profile statement was registered.(2) Any person who fails to comply with subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.Defences55B.—

(1)

A person is not liable under section 55(1) only because of a false or misleading statement in a prospectus or a profile statement if the person proves that he —

(a)

made all inquiries (if any) that were reasonable in the circumstances; and

(b)

after doing so, believed on reasonable grounds that the statement was not false or misleading.(2) A person is not liable under section 55(1) only because of an omission from a prospectus or a profile statement in relation to a particular matter if the person proves that he —

(a)

made all inquiries (if any) that were reasonable in the circumstances; and

(b)

after doing so, believed on reasonable grounds that there was no omission from the prospectus or the profile statement in relation to that matter.(3) A person is not liable under section 55(1) only because of a false or misleading statement in, or an omission from, a prospectus or a profile statement if the person proves that he placed reasonable reliance on information given to him by —

(a)

if the person is a corporation, someone other than a director, an employee or agent of the corporation; or

(b)

if the person is an individual, someone other than an employee or agent of the individual.(4) For the purposes of subsection (3), a person is not the agent of a corporation or an individual merely because he performs a particular professional or advisory function for the corporation or individual.(5) A person who is named in a prospectus or a profile statement as —

(a)

being a proposed director or underwriter;

(b)

making a statement included in the prospectus or the profile statement; or

(c)

making a statement on the basis of which a statement is included in the prospectus or the profile statement,is not liable under section 55(1) only because of a false or misleading statement in, or an omission from, the prospectus or the profile statement if the person proves that he publicly withdrew his consent to being named in the prospectus or the profile statement in that way.(6) A person is not liable under section 55(1) only because of a new circumstance that has arisen since the prospectus or the profile statement was registered if the person proves that he was not aware of the matter.”.

Read in full context — Companies (Amendment) Bill →