Liability to investors
The Court of Appeal has allowed an appeal by Roskilde, a Danish Bank, that it should compensate an investor who had acquired its subordinated loan notes. We reported in 2015 that the High Court had found Roskilde liable to the investor, who claimed he had invested in the loan notes on various false statements made by Roskilde in slides from an investor presentation. Although the investor had not attended the presentation, the slides were available on Roskilde's website. The Court of Appeal agreed with the High Court that, in this case, Roskilde had deliberately made the investor presentation available to the investor.
However, the Court of Appeal disagreed with the trial judge's conclusion that disclaimers included in the investor presentation did not protect Roskilde from liability. Statements to the effect that no representation was made in relation to any information in the presentation, and that it should not be relied on or act as an inducement to enter into any contract, were effective. In addition, the Appeal Court held, contrary to the judge's view, that further disclaimers excluding liability were sufficiently clearly drafted to exclude liability for misrepresentation.
The Court of Appeal also disagreed with the trial judge's finding that the investor could claim against Roskilde for misrepresentation, even though it had acquired the loan notes, not directly from Roskilde itself, but by purchasing them from a third party. It held that, although the loan notes represented obligations of a contractual nature, they were better regarded as a species of property, which the investor had acquired from the third party. The loss the investor suffered could have been the subject of a misrepresentation claim only if the investor had been induced to buy the notes by representations made by the third party. The investor had no claim against Roskilde, even though Roskilde had made representations to it.
Companies seeking investment will find it easier to manage their liability to investors as a result of this decision. It is now clear that liability for misrepresentation does not extend to investors acquiring equity or debt in the market rather than direct from the company. However, companies still need to take care to include appropriate, carefully drafted, disclaimers in investor presentations and other marketing material.