Statement in Lieu of Prospectus

Not every company that eventually lists on the stock exchange begins life by inviting the public. A private company may convert itself into a public company, or a public company may decide to allot its entire capital privately - to promoters, financial institutions, or a small group of investors - without ever inviting the public to subscribe.

Under the earlier Companies Act, 1956, such a company was still required to file a document called a Statement in Lieu of Prospectus with the Registrar of Companies before it could proceed to allot shares, precisely because it had not issued a prospectus. The statement served the same disclosure purpose as a prospectus - capital structure, names of directors, minimum subscription, and similar particulars - but was addressed to the Registrar rather than to the investing public, since no public invitation had been made. …