7.4 Persons responsible for the prospectus

In all jurisdictions, the issuing company is liable on the basis of either the special prospectus liability regulation, Dutch, German and English law, or on the basis of the general tort law provision, French law.

The directors of the issuing company can be held liable on the basis of the general tort law provision in Dutch and French law if they had knowledge of the misleading nature of the information in the prospectus. In the most likely circumstances, this will either not be the case or the investors will not be able to provide sufficient evidence for it. In German law, the company's directors as such cannot be held personally liable for misleading statements in the prospectus. The directors will only be liable if they have a personal financial interest in the issue of the securities. If the director is also shareholder of the company and sells (part of) the securities he holds in the company at the IPO, he can be held liable on the basis of section 44 of the Stock Exchange Act as person initiating the issue of the prospectus (Prospekterlasser). Only in English law, the directors can be held liable on the basis of section 90 FSMA 2000 without any further condition, because Rule 5.5.4 of the FSA Prospectus Rules stipulates that the director of the issuing company is deemed responsible for the prospectus.

In all legal systems, the lead manager and the other sponsoring banks can be held liable either on the basis of the special prospectus liability regulation (Dutch, German and English law) or on the basis of the general tort law provision (French law) for breach of duty in their due diligence inquiry into the contents of the prospectus. However, the sponsoring banks that are neither actively involved in the preparation process of the prospectus nor in the due diligence inquiry do not have the same responsibility. Their degree of liability, if at all, is adjusted to their specific role in the preparation of the prospectus.

Unlike in Dutch and French law where damages claims against experts involved in the preparation of the prospectus have to be based on the general tort law provision, these experts, e.g. accountants and auditors, can be held liable on the basis of the special prospectus liability regulation in German and English law. In all jurisdictions, the accountants and auditors do not incur liability for statements in one or more annual accounts that are included in the prospectus; their liability for information in the prospectus is restricted to the situation where they perform an audit of the entire prospectus. It is noteworthy that in Dutch law the investors cannot base their claim on the unfür commercial practices rules and thereby enjoy the benefits of the reversal of the burden of proof with respect to the tortiousness of the defendant's behaviour and the defendant's accountability as prescribed in section 6:193j DCC. The investor needs to claim on the basis of the general tort provision laid down in section 6:162 DCC.

If the accountant or auditor performs an audit of the entire prospectus instead of an inclusion in the prospectus of audited past annual accounts, the investors can hold these persons liable on the basis of section 44 of the German Stock Exchange Act as persons initiating the issue. Under the English common law tort for negligence, accountants and auditors are liable if they breach their duty of care by violating their obligation to make a due and careful inquiry into the prospectus contents. The required standard of culpability on their part is gross negligence. This standard will render a successful damage claim difficult; investors need to prove that the accountant was grossly negligent in his auditing, i.e. his conduct was far below the standard required from a reasonable accountant. However, it is noteworthy that in order to hold the accountant or auditor liable, the special prospectus regulation requires that they made an explicit statement in the prospectus that he accepts responsibility for (this specific part of) the prospectus. The FSA Handbook explicitly mentions that nothing in the FSA regulations can be construed as making a professional adviser responsible for the prospectus by reason only of giving advice as to its contents.