Are Directors Liable in Negligence for Misstatements in a Prospectus?

This article considers the issue of whether company directors owe a duty of care to retail investors in relation to misstatements made in offer documents. A recent New Zealand High Court decision said the answer was no. This article suggests that the reasons given by the High Court for its decision on this issue were not well grounded. It identifies and discusses the policy considerations relevant to finding whether directors owe a duty of care to retail investors in relation to negligent misstatements made in disclosure documents. Those policy considerations provide strong indicators in favour of finding a duty