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Cross-border Enforcement of Listed Companies' Duties to Inform (IVOR nr. 87) 2012/5.4.6
5.4.6 Prospectus liability on the basis of Stock Exchange Act
mr.drs. T.M.C. Arons, datum 07-05-2012
- Datum
07-05-2012
- Auteur
mr.drs. T.M.C. Arons
- JCDI
JCDI:ADS370851:1
- Vakgebied(en)
Ondernemingsrecht (V)
Voetnoten
Voetnoten
S. 44(3) Stock Exchange Act. For further information on the boundaries of applicability of a prospectus liability claim on the basis of s. 44(3), I refer to MünchKommBGB/Schnyder (2010), paras 103-107. Eger claims in my view correctly that this conflict of law rulecannot be applied in case where the Rome II regulation is applicable given the fact that European regulations are directly applicable and their effect cannot be denied by national legislation. Eger (2010), p. 67.
Note that in case the sales prospectus was published prior to listing and the securities were acquired prior to listing, the investor can claim refund of the purchase price on the basis of s. 13(1)(1) Sales Prospectus Act referring to s. 44(1) Stock Exchange Act for application thereof For an analysis of the consequences of the company taking back its own securities in relation to the capital protection as required by the Second Company Law Directive and its implementation in German company law (s. 57 AktG), I refer to: Schwark (1995); Wild (2007), pp. 177-230; in regard to the impletation in Dutch company law, I refer to: Van der Korst (1999). Cf. Federal Court of Justice, 31 May 2011 (II ZR 141/09) (Deutsche Telekom AG v Kreditanstalt für Wiederaufbau) (WM 2011 (27), p. 1273 et seq.; RIW2011(9), p. 640 et seq.) ruled that the take-over of the prospectus liability by Deutsche Telekom from the selling shareholder, who thereby had an economic interest in issuing the prospectus, violated s. 57 AktG. Because of this economic interest, the court deemed the following circumstances irrelevant: the selling shareholder's extemal liability for the prospectus; the issuing company's requirement to publish a prospectus. In order to avoid liability to pay back the unlawfully enjoyed benefit (in this case, the costs involved with, and the sum of, the US class settlement), the selling shareholder should indemnify the issuing company. For commentary of this case, I refer to: Wink (2011); Maap/Troidl (2011); Ziemons (2011).
S. 44(1) last sentence Stock Exchange Act.
S. 44(2) Stock Exchange Act.
Limitation periods are suspended either by negotiations between the parties (s. 203 GCC) or judicial prosecution of rights (s. 204 GCC).
S. 46 Stock Exchange Act.
S. 45 Stock Exchange Act.
Gross negligence on part of the claimant is insufficient to exclude a claim based on s. 44. Bartz (2008), § 58, para. 99; Bill and Explanatory Notes to the Third Financial Market Advancement Act, p. 80.
The information has to be clearly presented such that a careful reader has to realize that the information in the publication or notice concerns a modification of the information contained in the prospectus. There is no duty to make a specific reference to the prospectus. Bartz (2008), § 58, para. 100.
S. 45(2) Stock Exchange Act.
Bill and Explanatory Notes to the Third Financial Market Advancement Act, p. 81.
S. 47(2) Stock Exchange Act.
Section 44 of the Stock Exchange Act is applicable to issuers whose securities are admitted to listing on a regulated market situated in Germany. Furthermore, investors acquiring securities from an issuing company listed on a non-German regulated market and not incorporated under German law can also claim on the basis of section 44, if the securities were purchased on the basis of a transaction concluded in Germany or on the basis of an investment service provided wholly or partially in Germany.1
On the basis of section 44(1) of the Stock Exchange Act, the purchaser of listed securities on the basis of a prospectus containing incorrect or incomplete information that is essential/material to assess the securities can claim from:
those having assumed responsibility for the prospectus (Prospektverantwortlichen); and
those initiating the issue of the prospectus (Prospektveranlasser)
as joint debtors, the taking back of the securities acquired by the purchaser and the refluxd of the purchase price to the extent that it does not exceed the issue price, as well as the usual costs associated with the acquisition of securities, on the conditions that the acquisition of the securities was completed after publication of the prospectus and within six months after the first admission of the securities.2 The investor can also give back securities, which were not the securities originally acquired on the condition that the securities are issued by the same issuer and that they have identical characteristics.3 If the purchaser no longer holds the securities, he is entitled to the difference between the purchase price, to the extent that it does not exceed the issue price, and the price at which he sold the securities plus the usual costs associated with the acquisition of securities.4 It is noteworthy that the statutory limitation period of these claims is one year after the investor became aware of the incorrectness and/or incompleteness of the information contained in the prospectus.5 In any case, investors are barred from claiming damages three years after the publication of the prospectus.6
In case an investor claims on the basis of section 44 of the Stock Exchange Act, the defendant cannot rebut that he did not know the incorrectness and/or incompleteness of the information in the prospectus and that this ignorance is not due to gross negligence.7 However, an investor cannot obtain damages on the basis of section 44 of the Stock Exchange Act, if the defendant claims and, upon challenge, proves that:
the securities were not purchased on the basis of the prospectus;
the facts about which false or incomplete information was provided in the prospectus did not contribute to a reduction in the market price of the securities;
the purchaser knew at the moment of acquisition about the falseness or incompleteness of the information;8
if there was a publication, in Germany, prior to the conclusion of the acquisition of the securities, on the basis of section 15 of the Securities Trading Act (Wertpapierhandelsgesetz, WpHG) or a similar public notice which clearly stated that the information in the prospectus was false or incomplete;9
the claim is based solely on information contained in the summary of the prospectus or in a translation of the prospectus, unless this information is misleading, false or inconsistent when read simultaneously with the other parts of the prospectus.10
If section 44 and the other provisions on prospectus liability in the Stock Exchange Act are applicable, claims based on the general private law prospectus liability are excluded.11 However, private law contractaal claims or claims for intentional tort or tort in gross negligence remain unaffected by section 44 of the Stock Exchange Act.12
An investor claiming damages from an issuer and/or lead manager and/or other sponsoring banks on the basis of section 44 of the Stock Exchange Act has to prove the following:
the prospectus contains false or incomplete information that is material for proper assessment of the securities' value (wesentliche Angaben für die Beurteilung der Wertpapier);
liability constituting causation, i.e. causation between the prospectus and the investment decision to acquire the securities;
liability completing causation, i.e. causation between the breach of the norm not to publish misleading information in the prospectus and the actual losses sustained by the investor.