Statement in exchange for Prospectus

As its name is clear from the article, there’s not a prospectus, but it’s the prepared processus in exchange for prospectus. Some times the combiners of a public company pooled the company’s capital through its resources and they don’t need to invite the public to buy shares. In this case they must prepare an official prospectus in place of the company’s Prospectus, and a copy of this must definitely be deposited three days before the first company registrar of the allocation of shares.

Content of statements in exchange of prospectus – all those facts should be well expressed in statements in exchange for prospectus which is given in schedule III of companies. Act. These are mostly the same facts that are typically included in Prospectus. In addition to this, in a statement in return to Prospectus, each person whose name is given as Director or whose name is proposed for the post of Director should sign himself or his agent.

Statutory Liability for statement in return of the prosecutus- According to Section 70(5) Unreal statement is made in this document, its consequences are very dangerous and for this, every person of the company who has given the right to forward it to the registrar for registration can be honoured with a two-year imprisonment or penalty. 5,000/- or both, but if that person proves that-

a. Unreal statement said had no importance, or.

b. He had enough reasons to consider that statement true and he was considering it true then he could save himself from this penalty.

Duties related to statements in exchange of prospectus –

There are two duties complying for each promoter or the person responsible for the issue of the prospectus –

a. All facts of Schedule II of the Companies Act should be available in Prospectus, and.

b. Prospectus should not have any unreal statement which can deceive the people.