John Brown and four other associates decided to register a public company on 1 March 2009. After the company, Sunshine Mines Limited, was issued with a certificate of incorporation it went on further to secure a certificate to commence business in accordance with the laws of Zimbabwe.A prospectus was issued shortly after incorporation inviting members of the public to subscribe for shares in the company. The prospectus which listed John Brown and his four associates as the directors of the company stated that the company had discovered vast deposits of platinum in the Bikita district. As a result of these claims shares in the company started trading at $10 a share and Innocent Mupfumi bought 10,000 shares through a stockbrocking firm.It now transpires that the company discovered deposits of iron ore and not platinum. The shares have now dropped in value from $10 to $2 a share. Mr Mupfumi and other investors feel a deep sense of grievance.It also turns out that John Brown was removed in 2008 by the High Court from the position of liquidator of Direstraits Limited, a company which was financially in distress and was undergoing liquidation proceedings. The allegations against him were that he failed to account fully for money that he received from the company’s debtors.Required:In relation to company law, explain

(a) John Brown and his associates’ liability for misstatements in the prospectus. (7 marks)