What do you understand by statement in lieu of prospectus?

cbse
formsoforganisations

#1

When the promoters of a public company do not want to approach the public for securing the capital and they are in a position to get the subscriptions for shares and debentures from a limited circle of their friends and connections, no prospectus need to he filed and issued. But they have to file “statement in lieu of prospectus” at least three days before they allot the shares. The statement must be duly signed by all the persons named therein as directors. It contains practically similar information as required in the prospectus. The statement is required for the purpose of filing only.