Section 70 of Companies Act, 1956: Share allotment requires prospectus statement; violations lead to fines or imprisonment.
Section 70 of the Companies Act, 1956, prohibits a company with share capital from allotting shares or debentures unless a statement in lieu of prospectus is delivered to the Registrar at least three days prior. This statement must be signed by directors or their authorized agents and contain specified particulars and reports. This requirement does not apply to private companies. Violations result in fines, and delivering untrue statements can lead to imprisonment or fines unless the issuer proves the statement was immaterial or believed true. Misleading omissions render a statement untrue.
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