Prospectus Liability

The term prospectus liability stands for liability for the truthfulness and completeness of prospectuses which are issued in the capital investment field. It is in particular in the domain of capital investments in the so-called „grey capital market“ that the publication of prospectuses is mandatory. This obligation to issue prospectuses concerns, for instance, real estate funds, ship funds, life insurance funds, aircraft funds, funds for investments in renewable energies, as well as media funds. Prospectuses are also mandatory for debenture bonds. If a prospectus is faulty or deficient, that is to say that it does not convey truthful information concerning the respective financial investment management company, this will give rise to claims which may be or are to be asserted in relation to the initiators or founders of the company. In addition a faulty or deficient prospectus may give rise to claims for damages on the grounds of faulty or deficient counselling.

 

Apart from the so-called narrow statutory prospectus liability which was explained in the foregoing paragraph the law also provides for prospectus liability in a broader sense, which is basically nothing but a liability which becomes effective in cases of incorrect capital investment counselling.

Other legal areas around Bank and Capital Market Law