Personal Liability For Misleading Or Deceptive Public Announcements

The recent unanimous judgment of the Full Federal Court in

Australian Securities and Investments Commission v Narain

[2008] FCAFC 120:

Highlights the importance of ensuring public statements are not

misleading or deceptive.

Provides guidance where company officers may be held personally

liable for misleading statements by the company.

ASIC commenced civil action against the managing director of

Citrofresh International Ltd (Citrofresh), arising from an

announcement by Citrofresh to ASX. The managing director had

authorised the company secretary to release the announcement to the

market.

The action was instigated under section 1041H(1) of the

Corporations Act, which provides that a person must not engage in

conduct, in relation to a financial product [in this case, shares]

or financial service, that is misleading or deceptive or is likely

to mislead or deceive.

In overturning the previous decision by a single judge based on

a narrow...