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  • Chapter 4: Misleading and Deceptive Statements or Omissions

    • 20. Prohibition against misleading and deceptive statements or omissions

      (1) A person shall not make a Prospectus Offer if there is:
      (a) a misleading or deceptive statement in:
      (i) the Prospectus;
      (ii) any application form that is attached to or accompanies the Prospectus; or
      (iii) any other communication that relates to the Prospectus Offer, or the application form;
      (b) any material omission from the Prospectus, application form or any other document as required by this Law or the Rules; or
      (c) a significant new matter or a significant change in circumstances that requires a Supplementary to be issued.
      (2) A person does not contravene the prohibition in Article 20(1) if that person can prove the circumstances or matters specified in Articles 21 or and 22.

    • 21. Defence of reasonable inquiries and reasonable belief

      A person does not commit a contravention of Article 20(1), if that person proves that he:

      (a) made all inquiries that were reasonable in the circumstances; and
      (b) after making such inquiries, believed on reasonable grounds that the Prospectus was not misleading or deceptive.

    • 22. Defence of reasonable reliance on information given by another person

      (1) A person does not commit a contravention of Articles 20(1) if the person merely proves that he placed reasonable reliance on information given to him by:
      (a) if the person is not a natural person, someone other than a member of the governing body, employee or agent of the person; or
      (b) if the person is a natural person, someone other than an employee or agent of the natural person.
      (2) For the purposes of this Part, a person is not the agent of a person merely because he performs a particular professional or advisory function for the person.

    • 23. Statements about future matters

      (1) A person is taken to make a misleading or deceptive statement about a future matter whether by himself or through his agent, if he, at the time of making the statement or causing the statement to be made, did not have reasonable grounds for making the statement or causing the statement to be made.
      (2) The onus for proving that reasonable grounds existed for the purposes of Article 23(1) is on the person who made the statement or caused the statement to be made.
      (3) A person referred to in Article 23(2) may rely on the circumstances referred to in Article 21 or 22 in order to prove that he had reasonable grounds for making the statement relating to the future matter.

    • 24. Civil compensation

      (1) Any person prescribed in Rules made by the DFSA as being liable for a Prospectus is liable to pay compensation to another person who has acquired Securities to which the Prospectus relates and who has suffered loss or damage arising from any untrue or misleading statement in the Prospectus or the omission from it of any material matter required to have been included in the Prospectus under the Law or Rules.
      (2) The DFSA may make Rules prescribing circumstances in which a person who would otherwise be liable under Article 24(1) will not be so liable.
      (3) Nothing in this Article affects the powers, rights or liabilities that any person may have apart from this Article including the power to institute proceedings under Article 94 of the Regulatory Law 2004.

    • 25. Stop orders

      (1) If the DFSA is satisfied that an Offer of Securities to the Public would contravene or has contravened this Law or the Rules made for the purposes of this Law or it is in the interest of the DIFC, the DFSA may issue a stop order directing that no offer, issue, sale or transfer of the Securities be made for such a period of time as it thinks appropriate.
      (2) The procedures in Schedule 3 to the Regulatory Law 2004 apply to a decision of the DFSA under this Article.
      (3) If the DFSA decides to exercise its power under this Article, the offeror may refer the matter to the FMT for review.