Section 113 Investments and Securities Act

Section 113 of the Investments and Securities Act 2025 is about Civil liability for misstatements in prospectus. It is under Part IX (Regulation of Securities) of the Act. It provides as follows:

(1) Where a prospectus invites persons to subscribe for securities, the persons referred to in subsection (2) shall be liable to pay compensation to all persons who subscribe for such securities relying on the prospectus for the loss or damage they may have sustained by reason of any untrue statement or misstatement included in it.

(2) A person liable to pay compensation under subsection (1) includes —
(a) any director of the issuer or the equivalent at the time of the issue of the prospectus;
(b) any person who consented to be named and is named in the prospectus as a director of the issuer or the equivalent or as having agreed to become a director or the equivalent either immediately or after an interval of time;

(c) any employee of the issuer who participated in or facilitated the production of the prospectus;
(d) the issuing house and its principal officers;
(e) a person named in the prospectus as stockbroker, underwriter, auditor, banker or solicitor of the issuer or other expert in relation to the offer;
(f) promoter, for any loss or damage arising from the prospectus or any relevant portion of the prospectus in respect of which he was a party to the preparation; or

(g) a person named in the prospectus with his consent as having made a statement that is included in the prospectus or on which a statement made in the prospectus is based, for any loss or damage caused by the inclusion of the statement in the prospectus.

(3) Where under section 105 of this Act the consent of a person is required to the issue of a prospectus and he has given that consent, he shall not by reason only of his having given the consent be liable under this section as a person who has authorised the issue of prospectus except in respect of an untrue statement or misstatement purported to be made by him as an expert.

(4) A person shall not be liable under subsection (1) if he proves that —
(a) having consented to become a director of the issuer or the equivalent, he withdrew his consent in writing before the issue of the prospectus, and that it was issued without his authority or consent;
(b) the prospectus was issued without his knowledge or consent, and that on becoming aware, he immediately gave reasonable public notice that it was issued without his knowledge or consent;

(c) after the issue of the prospectus and before allotment, he, on becoming aware of any untrue statement or misstatement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason for his withdrawal; or
(d) as regards every untrue statement or misstatement —
(i) not purporting to be made on the authority of an expert, or of an official public document or statement, he had reasonable ground to believe and did up to the time of the allotment of the securities, as the case may be, believe that the statement was true,

(ii) purporting to be a statement by an expert and he had reasonable ground to believe that the person making the statement was competent to make it and that person had given the consent required by section 105 of this Act to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration, and
(iii) purporting to be a statement made by an official person or contained in what purports to be a copy of or an extract from an official public document, it was a correct and fair representation of the statement or copy of or extract from the document.

(5) The provisions of subsection (4) shall not apply to a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert in the case of a person liable by reason of his
having given a consent required of him by section 105 of this Act.

(6) A person who, apart from this subsection, would under subsection (1) be liable, by reason of his having given a consent required of him by section 105 of this Act as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert, shall not be so liable if he proves that —

(a) having given his consent under section 105 of this Act to the issue of the prospectus, he withdraws it in writing before registration of the prospectus;
(b) after registration of the prospectus and before allotment he, on becoming
aware of the untrue statement or misstatement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason for his
withdrawal; or
(c) he was competent to make the statement and that he had reasonable ground to believe that the statement was true.