COMPANIES ACT - 1963 (ACT 179)

    Section - 274 - Statement in Lieu of Prospectus

    (1) A public company shall, within twenty-eight days after its incorporation, or after its conversion from a private company in accordance with section 273 of this Code, deliver to the Registrar for registration a statement in lieu of prospectus, signed by every person who is named therein as a director or a proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out in Part I of the Sixth Schedule to this Code and, in the cases mentioned in Part II of that Schedule, accompanied by the accounts and reports specified therein:

    Provided that this subsection shall not apply to,

    (a) any company limited by guarantee;

    (b) any company which, within twenty-eight days after its incorporation or conversion from a private company, delivers for registration a prospectus complying in all respects with the Seventh Schedule to this Code.

    Seventh Sch.

    (2) Every existing company shall, within six months after the commencement of this Code, deliver to the Registrar for registration a like statement in lieu of prospectus signed by every director of the company or by his agent authorised in writing:

    Provided that this subsection shall not apply to any existing company which, prior to the expiration of such six months,

    (a) alters its Regulations so as to convert the company into a private company by inserting in its Regulations the conditions specified in subsection (3) of section 9 of this Code; or

    (b) is converted into a company limited by guarantee in accordance with section 11 of this Code; or

    (c) registers and publishes a prospectus complying in all respects with the Seventh Schedule to this Code;

    Seventh Sch.

    and for the purposes of subsection (4) of this section an existing company shall be deemed to be a company to which this subsection applies until it has complied with proviso (a), (b) or (c) of this subsection.

    Sixth Sch.

    (3) Every statement in lieu of prospectus delivered under the foregoing subsections shall, where the persons making any such report as is specified in Part II of the said Sixth Schedule have made any such adjustments as are mentioned in paragraph 27 of such Schedule, have endorsed thereon or attached thereto a written statement signed by those persons setting out the adjustments and giving the reason therefor.

    (4) A company to which subsection (1) or (2) of this section applies, shall not, after the commencement of this Code, issue any of its shares or debentures until after the expiration of seven days after the statement in lieu of prospectus has been delivered to the Registrar:

    Provided that this subsection shall not prohibit the issue to the subscribers of the Regulations of the number of shares for which each has subscribed.

    (5) If any shares are issued in contravention of the immediately preceding subsection any person to whom they are allotted shall be entitled to rescind the allotment at any time within three months of the allotment notwithstanding that the company is in course of being wound up, and every director of the company who knowingly contravenes or permits the contravention shall be liable to compensate the company and the allottee respectively for any loss which the company or the allottee may have sustained thereby.

    (6) If a company contravenes subsection (1), (2) or (3) of this section, the company and every officer of the company who is in default shall be liable to a fine not exceeding one hundred pounds.

    (7) Where a statement in lieu of prospectus delivered to the Registrar under subsection (1) or (2) of this section includes any untrue statement or omits truthfully to state any of the particulars required to be stated by virtue of the Sixth Schedule then,

    (a) any person, which expression for the purposes of this subsection shall not include the company itself, who authorised the delivery of the statement in lieu of prospectus for registration shall be liable to imprisonment for a term not exceeding two years or to a fine not exceeding one hundred pounds or both, unless he shall prove either that the untrue or omitted statement was immaterial or that he had reasonable grounds to believe and did, up to the time of delivery for registration of the statement in lieu of prospectus, believe that the untrue statement was true;

    (b) an allottee who acquired any shares or debentures in the company in reliance on the statement in lieu of prospectus and who was misled by the untrue statement or omission shall be entitled to rescind the allotment of such shares or debentures and to recover from any person guilty of an offence under the foregoing paragraph, whether convicted or not, compensation for any loss which he has suffered by reason of such reliance:

    Provided that an allottee shall not be entitled to rescission under this subsection unless he claims to rescind with reasonable promptitude after discovering that an untrue statement or omission was made, and, in any case, prior to the winding up of the company;

    (c) any person who acquires any shares or debentures in the company from an allottee in reliance on the statement in lieu of prospectus and who was misled by the untrue statement or omission shall be entitled to recover from any person guilty of an offence under paragraph (a) of this subsection, whether convicted or not, compensation for any loss which he has suffered by reason of such reliance.