Now moving on the to the second duty which is general duty of disclosure, S.

236 of
CMSA 2007 implements the reasonable investor standard of disclosure in preparing
the prospectus. The disclosure of information must be that a reasonable investor
would reasonably require and expect to find in a prospectus so as to enable the
investor to make an informed decision.

It was said in British Davey Committee that there must be a full and frank disclosure
on the prospectus to allow them to make an informed decision. As in the case of New
Brunswick v Muggeridge, it was held that failure to disclose any material information
would affect the nature of the privileges and advantages which the prospectus holds
out as inducement to take shares.

The Prospectus Guidance issued by the Securities Commission included the material
information needed to be disclosed in the prospectus of the initial public offering
company. Among the material information that needed to be disclosed are regarding
the proceeds, ownership structure, lock-up agreement, pricing, market timing,
promotional activities, takeover offer and acquisition plan as business strategies.

Misstatement, in a prospectus which refers to material omissions, any false or

misleading information included in a prospectus may lead to being liable for civil or
criminal liability if found guilty.

For criminal liability, S.246 of CMSA provides that if a person issues a prospectus
which contains material omission or any information that is false or misleading, the
person commits an offence. In respect to civil liability, S.248 of CMSA states that a
person who suffers loss or damage as a result of material information in the
prospectus, may recover the amount of loss or damage.

There are specifically three common defenses that can be invoked by the person
charged under S.246 and S.248 namely, due diligence defence, reliance defence and
withdrawal of consent defence. 

For due diligence, a person can be excluded from the charge under S.250 of CMSA, if
it can be resorted to show that he has made all reasonable queries and thus believed on
reasonable grounds that the inclusion of statement in the prospectus is not misleading
neither deceptive nor such prospectus did not include any omission.

As regards to the reliance defence under S.251, S.252 and S.253 of CMSA, the
defence is applicable if he can successfully prove that he had reasonably believed and
relied on the information supplied by another person categorically experts and public
officer. Lastly, speaking for defence of withdrawal of consent, S.254 of CMSA states
that no one will liable to pay compensation claimed by suffered party if the issuance
of prospectus were done outside the knowledge of director of that particular company.

In considering all this information, it is pretty obvious from British Davey Committee
and the case of New Brunswick v Muggeridge that Optimax must follow the duty of
disclosure of material information in their prospectus as provided under S.236 of
CMSA and the Prospectus Guidelines. Optimax should also ensure they do not
provide any false or misleading statements in their prospectus in order to avoid civil
or criminal liability accruing to them under S.246 and S.248 of CMSA.
If Optimax is charged under Section 246 and 248, there are three common defences
that can be invoked by Optimax to be exempted from the liability namely due
diligence defence, reliance defence and withdrawal of consent defence.

Thus, it is clear that Optimax should ensure that all relevant information contained
under the Prospectus Guidance and the CMSA is disclosed in its prospectus. Optimax
should also ensure that any inaccurate or deceptive material that would cause loss or
damage to investors is not presented.