Statement in lieu of Prospectus
As it is obvious by its name article is not a prospectus but it is prospectus prepared in lieu of prospectus. Some times the conveners of a public company pool the capital of the company through their own resources and they do not require to invite the public for purchasing the shares. In this case they have to prepare an officiate prospectus in place of the prospectus of the company, and a copy of that must be definitely deposited with the Company Registrar three days in advance of allotment of shares.
Contents of statements in lieu of prospectus – All those facts must be well expressed in the statements in lieu of prospectus which arc given in Schedule III of the Companies. Act. These are mostly the same facts which are generally included in the prospectus. Also in the statement in lieu of prospectus, each such person, who has name is given as director or whose name is proposed for the post of director, must give his own or his agent’s signatures.
Statutory liability for statements in lieu of prospectus-According to Section 70(5) ifan untrue statement is made in this document then the consequences thereof happen very much perilous and for this each person of the company, who has given authority to forward it to the Registrar for registration, can be awarded with two years imprisonment or penalty of Rs. 5,000/- or both, but if that person proves that-
a. The said untrue statement was having no importance, or
b. He was having sufficient reasons to take that statement as true and he had been presuming it as true then he can save himself from this penalty.
Duties relating to statements in lieu of prospectus –
There are following two duties for each promotor or the person responsible for issue of prospectus –
a.All the facts of Schedule II of the Companies Act must be available in the prospectus, and
b.There must be no such untrue statement in the prospectus which may deceive the public.