Amount of compensation payable, Business Law and Ethics

Amount of compensation payable:

In CLARK V URQUHART (44) the court explained that the amount of compensation payable under S.45 of the Act is calculated or measured in the same way as damages for fraudulent misrepresentation is measured. The court also explained that the word "compensation" was chosen in order to avoid the "invidious association" of damages with dishonesty in such a situation". In fact the specified persons were to be made liable as a matter of policy, irrespective of their moral innocence.

A person sued under S.45 can rebut the presumption of liability by proving that-

i)                    having consented to become a director he withdrew his consent before the issue of the prospectus and that it was issued without his authority or consent; or

ii)                  the prospectus was issued without his knowledge or consent, and which on becoming aware of its matter he forthwith gave reasonable public notice that it was issued without his knowledge or authority; or

iii)                after the issue of the prospectus and before allotment thereunder he, on becoming aware of the untrue statement, withdrew his consent to the prospectus and gave reasonable public notice that he had done so and why; or

iv)                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 that the statement was true; or

v)                  the statement was made by an expert and the expert consented to the inclusion of his statement in the prospectus and that he believed the expert to be competent to make the statement; or

vi)                the statement was taken from a public official document or was made by an official, and was a correct and fair representation of the document or statement.

Posted Date: 1/12/2013 3:11:18 AM | Location : United States

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