If a public company makes a private arrangement for raising its capital then it must file a statement in lieu of prospectus with the registrar at least three days before any allotment of shares or debentures can be made.
Statement
In Lieu Of Prospectus (Section 70):
If a public company makes a
private arrangement for raising its capital then it must file a statement in
lieu of prospectus with the registrar at least three days before any allotment
of shares or debentures can be made.
If allotment of shares or
debentures is made without filing the Statement in lieu of prospectus, the
allottee may avoid it within two months after the statutory meeting, or where
no such meeting is to be held, within two months of the allotment.
Contravention also renders the company and every director liable to a fine up
to Rs. 10,000.
Misleading
Prospectus (Sections 62-63):
The
prospective shareholders are entitled to all true disclosures in the
prospectus. The persons issuing the prospectus are bound to state everything
accurately and not to omit material facts,
1. Which contains untrue statements in it.
2. Which does not contain particulars which ought to have
been there i.e.
Suppression of facts which if they had been there i.e
suppression of facts which if they would not have induced the purchaser to
invest money.
Tags : Business Environment and Law-Prospectus And Statement In Lieu Of Prospectus
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