Statement in lieu of ProslJectuS.

The statement must be filed at least three days before the allotment.

It must be signed by every person named therein as a director or a

proposed director. A company which does not issue a prospectus, is not allowed

to allot shares or debentures without filing a statement in lieu of prospectus.

The protozoa of the statement in lieu of the prospectus is given in the

Third Schedule of the Companies Act. The statement contains more or less.

the same detail!:” as me given in a prospectus.

Section 70 does not apply to private company.

Penalty. The consequence of miss-statement in the document is also

serious. If the statement in lieu of prospectus contains amounted statement, every person who authorized its delivery to the Registrar for registration shall

be punishable with imprisonment unto two years or with fine unto Rs. 50,000 or both. unless he Can prove that the mis-statement was immaterial or that

he had reasonable ground to believe the statement to be true upto the time of the delivery of the document for registration. [Section 70(5)].

If a company acts in contravention of Section 70, the company and every director of the company, who willfully authorizes or Penn its the contravention,

shall be punishable with fine which may extend to Rs.

10,000.(B) ABRIDGED PROSPECTUS [SEC. 56(3)]

Section 56(3), as amended by the Amendment Act of.1988, states that

no application fom1 can be issued for shares and debentures of a company

unless it is accompanied by an abridged prospectus which complies with the requirement of the Act. However, the full prospectus is to be tl.trnished on a

request being made by any person before the closing of the subscription list. If a person acts in contravention of this provision, he shall be punishable with

fine which may extend to Rs. 50,000.