FULL DETAILS.

Auckland Star, Volume LXIV, Issue 246, 18 October 1933, Page 10

FULL DETAILS.

EVERY PROSPECTUS.

LIABILITY FOR STATEMENTS

BILL'S REQUIREMENTS.

(By Telegraph.—Parliamentary Reporter.)

/ WELLINGTON, this day

Several lengthy clauses and a comprehensive schedule in the Companies Bill set out drastic requirements in the issue of company prospectuses. While an abbreviated form will be permitted in newspaper advertisements, a prospectus offering shares for public subscription must show the minimum amounts which must be raised to purchase any property, to defnay preliminary expenses and commissions., to repay any moneys borrowed in respect of the foregoing matters, and the working capital necessary. The prospectus must also disclose the names and addresses of vendors of any property purchased or proposed to be bought, the amount payable (specifying cash, shares or debentures), and the amount, if any, payable for good will. Expenditure within the previous two years in commissions to obtain subscriptions or payments to the promoters must be disclosed, and if any proposed director has an. interest in a property sought to be purchased, the extent of that interest must be shown in the prospectus.

Where capital is sought in respect of an existing business, the prospectus must set out <- report by the company's auditors on the profits or losses of the company for the three years preceding, and if the proceeds of any share issue are to be applied to the purchase of any business, directly or indirectly, the prospectus must include a similar report on the profits or losses for the preceding three years of that business.

Extent of Liability. Clause 4S defines the liability for statements in a prospectus. This extends •to the directors, or those named as having agreed to become directors, and to every promoter and every person who has authorised the issue of the prospectus, but there are sub-clauses protecting from liability persons who, having agreed to become directors, withdraw consent before the issue Of the prospectus, or, after the issue, give reasonable public notice that it has been issued without their knowledge or consent, and if they are aware of any untrue statement therein, make this reason public. Except for the above qualification, persons who issue a prospectus shall be liable to pay compensation to all persons who, on the faith of the prospectus, subscribe for shares or debentures, and are caused loss or damage by reason of any untrue state-1 ment therein, or in any report or! memorandum accompanying the prospectus.