Canada Corporations Act

Marginal note:Liability for statements in prospectus

• 80 (1) Where a prospectus issued by or on behalf of a company invites persons to subscribe for securities of the company,

  • (a) every person who is a director of the company at the date 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 a proposed 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,

  is liable to pay compensation to all persons who subscribe for any securities of the company on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement therein, or in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith, unless it is proved

  • (e) 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,

  • (f) 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,

  • (g) that, after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent thereto, and gave reasonable public notice of the withdrawal, and of the reason therefor, or

  • (h) 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 securities, believe, that the statement was true,

    • (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, and

    • (iii) as regards every untrue statement 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, it was a correct and fair representation of the statement or copy of or extract from the document;

  but a person is liable to pay compensation as aforesaid if it is proved that he had no reasonable ground to believe that the person making any such statement, report or valuation as is mentioned in subparagraph (h)(ii) was competent to make it.

• Marginal note:Prospectus containing name of person as director

  (2) Where the prospectus contains the name of a person as a director or proposed director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorized or consented to the issue thereof, the directors of the company, except any without whose knowledge or consent the prospectus was issued, and any other person who authorized the issue thereof, are liable to indemnify the person named as aforesaid against all damages, costs, and expenses to which he may be made liable by reason of his name having been inserted in the prospectus, or in defending himself against any action or legal proceedings brought against him in respect thereof.

• Marginal note:Recovering contribution

  (3) Every person who, by reason of his being a director or named as a director or as having agreed to become a director, or of his having authorized the issue of the prospectus, 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.

• Marginal note:Definitions

  (4) For the purposes of this section

  expert

  expert

  expert includes engineer, valuer, accountant, and any other person whose profession gives authority to a statement made by him; (expert)

  promoter

  promoteur

  promoter means a promoter 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. (promoteur)