Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 704

704. (1) Where:

   (a)  there is, in a statement that purports to be a Part A statement served
        under subsection 637 (1), in an offer that purports to be a takeover
        offer, in a statement that purports to be a Part C statement served
        under paragraph 679 (1) (a) or in a notice served or given under
        section 657 or subsection 701 (2) or 703 (1) or (4), matter that is
        false in a material particular or materially misleading; or

   (b)  there is an omission of material matter from such a statement, offer
        or notice; a person to whom this subsection applies contravenes this
        subsection.

(2) The persons to whom subsection (1) applies are:

   (a)  the offeror;

   (b)  where false or misleading matter appeared in, or material matter was
        omitted from, a statement:

        (i)    if the offeror is or includes a body corporate-a person who was
               a director of that body corporate when the statement was
               served, other than:

                (A)  a director who was not present at the meeting at which
                     the resolution authorising the signing of the statement
                     was agreed to; or

                (B)  a director who voted against that resolution; and

        (ii)   subject to subsection (9), a person a notice of whose consent
               to the inclusion in the statement of a report made by the
               person has been lodged under subsection 644 (4); and

   (c)  where:

        (i)    false or misleading matter appeared in, or material matter was
               omitted from, an offer or notice; and

        (ii)   the offeror is or includes a body corporate;
a person who was a director of that body corporate when the offer was sent or
the notice was given, as the case may be.

(3) Where:

   (a)  there is, in a statement that purports to be a Part B statement given
        under subsection 647 (1) or in a statement that purports to be a Part
        D statement served under subsection 683 (1), matter that is false in a
        material particular or materially misleading; or

   (b)  there is an omission of material matter from such a statement; a
        person to whom this subsection applies contravenes this subsection.

(4) The persons to whom subsection (3) applies are:

   (a)  the target company;

   (b)  where the statement was signed as mentioned in paragraph 647 (2) (a)
        or 683 (2) (a)-a person who was a director of the target company when
        the statement was given or served, other than:

        (i)    a director who was not present at the meeting at which the
               resolution authorising the signing of the statement was agreed
               to; or

        (ii)   a director who voted against that resolution; and

   (c)  where the statement was signed as mentioned in paragraph 647 (2) (b)
        or 683 (2) (b)-the person who signed the statement.

(5) Where:

   (a)  there is:

        (i)    in a report that is set out in a statement that purports to be
               a Part B statement in accordance with paragraph 647 (3) (a) or
               accompanies a statement that purports to be a Part B statement
               in accordance with section  648 ;

        (ii)   in a report that is set out in a statement that purports to be
               a Part D statement in accordance with paragraph 683 (3) (a); or

        (iii)  in a report that accompanies a notice given under
               subsection 703 (4);
matter that is false in a material particular or materially misleading; or

   (b)  there is an omission of material matter from such a report; the person
        who made the report contravenes this subsection.

(6) It is a defence to a prosecution of a person for a contravention of
subsection (1), (3) or (5) if it is proved:

   (a)  that, when the statement was served or given, the offer was sent, the
        notice was given or the report was made, the person:

        (i)    believed on reasonable grounds that the false matter was true;

        (ii)   believed on reasonable grounds that the misleading matter was
               not misleading;

        (iii)  in the case of an omission, believed on reasonable grounds that
               no material matter had been omitted; or

        (iv)   in the case of an omission, did not know that the omitted
               matter was material; and

   (b)  that:

        (i)    on the date of the information, the person so believed or did
               not so know; or

        (ii)   before that date, the person ceased so to believe or came to
               know that the omitted matter was material, and as soon as
               practicable gave reasonable notice containing such matters as
               were necessary to correct the false or misleading matter or the
               omission.

(7) A person who contravenes subsection (1), (3) or (5), whether or not the
person has been convicted of an offence in respect of the contravention, is
liable, subject to this section, to pay compensation to a person who acts, or
refrains from acting, on the faith of the contents of the relevant statement,
offer, notice or report for any loss or damage suffered by that person by
relying on the false or misleading matter or because of the omission of
material matter.

(8) It is a defence to an action under subsection (7) if:

   (a)  any matter referred to in paragraph (6) (a) is proved; and

   (b)  where the action is brought by a person who acted on the faith of the
        contents of the relevant statement, offer, notice or report, it is
        also proved that:

        (i)    when the plaintiff so acted, the defendant believed as
               mentioned in subparagraph (6) (a) (i), (ii) or (iii) or did not
               know that the omitted matter was material; or

        (ii)   before the plaintiff so acted, the defendant ceased so to
               believe or came to know that the omitted matter was material,
               and as soon as practicable gave reasonable notice containing
               such matters as were necessary to correct the false or
               misleading matter or the omission.

(9) A person referred to in subparagraph (2) (b) (ii) contravenes subsection
(1), and is liable to pay compensation under subsection (7), only in respect
of false or misleading matter in the report referred to in that subparagraph
or an omission of material matter from that report.