Companies Act 2014 section 1169

Civil liability of directors and experts

Section 1169 establishes the civil liability of directors and experts for loss or damage suffered by shareholders as a result of misconduct or untrue statements in connection with a company division, and sets out the defences available to those persons.

• Shareholders who suffer loss due to misconduct by directors or experts in preparing or implementing a division are entitled to compensation from the person responsible for the misconduct.
• Where untrue statements appear in the draft terms of division, the directors' explanatory report, the expert's report or the division financial statement, the directors or expert responsible may be held liable for resulting shareholder losses.
• Directors can defend themselves by showing they were unaware of the document's issue and promptly notified shareholders, or that they had reasonable grounds to believe the statement was true after exercising all reasonable care and skill.
• Experts can defend themselves by showing they promptly notified the company and shareholders of the untruth, or that they were competent to make the statement and had reasonable grounds for believing it to be true.