Q.What is a Statement in Lieu of Prospectus? When is it required to be filed?

A public company that never actually invites the public still owes the same standard of honest disclosure.

A public company does not always raise its capital by inviting the general public — sometimes the entire capital is arranged privately, through the company's own promoters, directors and their personal contacts, without any share being offered to the public at large. This commonly happens when a private company converts into a public company but continues to raise its further capital privately rather than through a public issue. Because no prospectus is issued in such a case (there being no public invitation to respond to), the company is instead required to file a Statement in Lieu of Prospectus with the Registrar of Companies before it allots any shares. …

Students sometimes assume a company raising capital privately need not disclose anything at all, since there is no public issue. In fact, the Statement in Lieu of Prospectus exists precisely …