Board members not liable towards investors

Investors who had subscribed for shares in a private placement in a company that was to develop and sell a medical product, brought a claim for damages against the board members of the company due to allegedly incorrect or misleading information in connection with the placement, see section 17-1 of the Companies Act. The completion and sale of the product, whose purpose was to treat sleep disorders, had been delayed, and the company was placed under bankruptcy proceedings. The Supreme Court found that the information the board members had given about the facts was essentially correct, but that due to insufficient testing they had misjudged the possibilities of reusing the product. This misjudgment was still not sufficient to impose liability for damages. It was mentioned that the threshold for imposing liability on the basis of an incorrect assessment is high. The investors themselves had to bear the risk that their expectations about the future did not materialise. They were also professional and aware that there was a technical risk associated with the development of the product. The board members were not liable.

Read the judgment (Norwegian only)

Area of law: Company law. Section 17-1 of the Companies Act. 

Paragraphs: 42, 43, 58, 59, 60 og 78.

Justices: Indreberg, Normann, Kallerud, Falch, Østensen Berglund