Section 508, The Companies Act, 2009

(1) Subject to this section, every person who– (a) is a director at the time of the issue of a prospectus; (b) authorises or causes himself to be named and is named in a prospectus as a director or as having agreed to become a director either immediately or after an interval of time; (c) is a promoter; or (d) authorises or causes the issue of a prospectus, shall be liable to pay compensation to any person who subscribes for or purchases securities on the faith of a prospectus for any loss or damage sustained by reason of– (i) an untrue statement in the prospectus; (ii) the wilful non-disclosure in the prospectus of any matter of which he had knowledge and which he knew to be material. 368 369 Material change. Civil liability for misstatement in (2) No person shall be liable under paragraph (d) of subsection (1) as a person authorising or causing the issue of a prospectus by reason only that– (a) in a case where the consent of an expert is required to the issue of a prospectus, he has given that consent, except in respect of an untrue statement in the prospectus purporting to be made by him as an expert; or (b) his name is included in a prospectus as a trustee for debenture holders, trustee, auditor, banker, legal practitioner or share- broker or as a person performing some other professional or advisory function only. (3) Subject to subsection (4), no person shall be liable under subsection (1) if he proves that– (a) having consented to become a director, he withdrew his consent before the issue of the prospectus, and it was issued without his authority or consent; (b) the prospectus was issued without his knowledge or consent and he gave reasonable notice to the public of the fact as soon as possible after he became aware of its issue; (c) after the issue of the prospectus and before any allotment or sale under it he withdrew his consent and gave reasonable notice to the public of the withdrawal as soon as possible after he became aware of any untrue statement in the prospectus. (d) in relation to an 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 or sale of the securities believe, that the statement was true; (e) in relation to an untrue statement not purporting to be a statement made by an expert or to be based on a statement made by an expert contained in what purports to be a copy of or extract from a report, memorandum or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report, memorandum or valuation, and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it and that that person had given the consent required by subsection (1) of section 503 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for lodging, or to that person’s knowledge, before any allotment or sale under the prospectus; and (f) in relation to a statement purporting to be a statement made by a public officer contained in what purports to be a copy of or extract from a public document, it was a correct and fair representation of the statement or copy of or extract from the document. (4) Subsection (3) shall not apply in the case of a person who is liable under paragraph (d) of subsection (1), by reason of his having given a consent required of him by section 503, in respect of an untrue statement purporting to have been made by him as an expert. (5) A person who apart from this subsection would be liable under paragraph (d) of subsection (1) by reason of his having given a consent required of him by section 503, in respect of an untrue statement purporting to be made by him as an expert shall not be liable if he proves that– 370 371 (a) having given his consent under section 503 to the issue of the prospectus, he withdrew it in writing before a copy of the prospectus was registered by the Commission; (b) after a copy of the prospectus was registered by the Commission and before any allotment or sale of securities, he withdraws his consent and gives reasonable notice to the public of the withdrawal as soon as possible after he became aware of the untrue statement; or (c) he was competent to make the statement and had reasonable ground to believe and did up to the time of the allotment or sale of shares or debentures believe that the statement was true. (6) Where– (a) a prospectus contains the name of a person as a director, or as having agreed to become a director, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to its issue; or (b) the consent of a person is required under 501. to the issue of the prospectus and he either has not given that consent or has withdrawn it before the issue of the prospectus, every director of the company other than a director without whose knowledge or consent the prospectus was issued, and every other person who authorised or caused its issue shall be liable to indemnify the person so named or whose consent was so required 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 of the inclusion in it of a statement purporting to be made by him as an expert, or in defending himself against any action or legal proceeding brought against him in respect thereof.