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The Statement in Lieu of Prospectus needs to be filed with the registrar if the
company does not issues prospectus or the company issued prospectus but
because minimum subscription has not been received the company has not
proceeded for the allotment of shares.
Where a public company does not invites public to subscribe for it shares but arrange
money from private sources, it needs not issue the prospectus to the public. But the
company has to get its prospectus registered three days before the allotment of shares.
Thus, the company not inviting public to subscribe, prepare a draft prospectus which
contains the information given in schedule III of the act, such a draft prospectus is
knows as a statement in lieu of prospectus.
Provisions: Only public company which does not invite public for subscription can
issue this prospectus. Responsibility will be same as that when actual prospectus is
issued.
When issued: Section 70(1) requires a public company having a share capital to file
with the Registrar of Companies a statement called Statement in lieu of prospectus
in the following cases:
If a company does not want to issue a prospectus to the public for subscription of the
shares, this statement is required to be issued to the public for necessary information.
It must be signed by every person named in it as director or by his agent authorized in
writing: The nature of the information of this document is more or less similar to that
given in the prospectus. A copy of this statement must be filed with registrar within
prescribed time. This provision does not apply to private company.