Civil prospectus liability under the laws of Germany and South Africa

Author: Damian Schmidt

ISSN: 1996-2177
Affiliations: Attorney, Oppenländer Rechtsanwälte, Stuttgart, Germany
Source: South African Law Journal, Volume 139 Issue 2, p. 407-431


Civil prospectus liability is the liability for a prospectus which is published in the  context of issued securities on the primary market. Both the German and South  African legal systems protect investors who are induced into investing by incorrect  prospectuses. Chapter 4 of the Companies Act 71 of 2008 contains rules, in  s 104 and s 105, which set out the prospectus liability of directors, experts, and  others. German law provides comparable provisions. The differences between the two  systems become apparent in the detail. South Africa’s statutory prospectus liability  clearly sets out the liability of experts and focuses mainly on the personal liability of  directors. The German law has traditionally referred to unwritten legal principles  in respect of experts. What both legal systems have in common is that the mutual  interests of potential plaintiffs and defendants are not exclusively regulated by statute  law, and that both pursue a balanced form of investor protection. This article aims  to contribute to the future harmonisation of both legal systems in order to facilitate  cross-border investments.