THE PROSPECTUS OF A NETHERLANDS ANTILLES BASED INVESTMENT FUND
A prospectus may not be misleading
A closed-end investment fund is a fund that does not redeem its own shares. A semi open-end or semi closed-end fund may redeem shares, yet it is not obliged to do so or does not do so unrestrictedly. A so-called open-end investment fund is obliged under the conditions set thereto to redeem shares in its capital and thus has no discretionary power. In connection herewith one also speaks of ‘continuous issuance and purchase of participation rights’ (in case of shares).
It is not uncommon that a prospectus is used by a fund to offer shares (or other securities) in its capital to potential investors. The mean reason: a fund is obliged to provide adequate information to ‘the public’. A prospectus of an investment fund should give a clear view of a.o. the structure of and responsibilities within said fund, and also of its nature and the way in which it is supervised. In the event of an open-end investment fund, the prospectus must contain the conditions regarding the obligation of the fund to redeem shares. These aspects (may) play an important role when reviewing an investment fund and especially when assessing whether or not investments should be made in this fund.
If someone has incurred damages pursuant to a misleading prospectus, he may base his claim on the general concept of tort (article 6:162 Civil Code) or on the specific provisions dealing with misleading advertising, including misleading prospectuses (articles 6:194 and 6:195 Civil Code). A fund (and, if applicable, underwriters) can thus be held liable for any purchases of securities based on a prospectus that not gives a true, complete and fair view. Article 6:195 Civil Code swifts the burden of proof to the issuing fund: the fund has to proof that the prospectus is not misleading, simply because it, in whole or in part, determined or has caused to be determined the content and presentation of the prospectus.
Karel Frielink
Attorney (lawyer) / Partner
