QUESTION 2 [15 Marks]

Simon, John, Mildred and Thabane are the directors of Value for Money Ltd. The company wants to make an initial public offering of its shares. The directors have prepared a prospectus that provides the public with the prescribed information. In the prospectus, there is reference to an attachment, which attachment omits a matter that is not specifically required by the Companies Act 71 of 2008 to be included in the prospectus or in the attachment. Thabane insists that the matter should be included in the attachment as it may assist the public to make an informed decision on whether or not to invest in the company. However, Mildred reassures Simon, John and Thabane that the omission of the matter is not serious because: (i) the matter was not omitted from the prospectus itself; (ii) the matter falls outside the categories of information prescribed by the Companies Act 71 of 2008 and the Companies Regulations, 2011 to be included in the prospectus or in the attachment; and (iii) the inclusion of the matter might discourage some potential investors from acquiring shares in the company. Simon, John and Mildred consent to the issue of the prospectus. However, Thabane does not consent to the issue of the prospectus. The prospectus is subsequently registered and issued.

Provide a legal opinion in which you comprehensively advise the directors of Value for Money Ltd on the correct legal position regarding the matter that has been omitted and the legal consequences for the directors arising from the above factual scenario. (15 Marks)