law: Companies Act, 1956
  Sec 70   -  Prohibition of allotment
  
  in certain cases unless statement in lieu of prospectus delivered to Registrar 
  (1) A company having a share capital, which
  
  does not issue a prospectus on or with reference to its formation, or which has
  
  issued such a prospectus but has not proceeded to allot any of the shares
  
  offered to the public for subscription, shall not allot any of its shares or
  
  debentures unless at least three days before the first allotment of either
  
  shares or debentures, there has been delivered to the Registrar for
  
  registration a statement in lieu of prospectus signed by every person who is
  
  named therein as a director or proposed director of the company or by his agent
  
  authorized in writing, in the form and containing the particulars set out in
  
  Part I of Schedule III and, in the cases mentioned in Part II of that Schedule,
  
  setting out the reports specified therein, and the said Parts I and II shall
  
  have effect subject to the provisions contained in Part III of that Schedule.
  (2) Every statement in lieu of prospectus
  
  delivered under sub-section (1), shall, where the persons making any such
  
  report as aforesaid have made therein, or have without giving the reasons indicated
  
  therein, any such adjustments as are mentioned in clause 5 of Schedule III,
  
  have endorsed thereon or attached thereto a written statement signed by those
  
  persons, setting out the adjustments and giving the reasons thereof.
  (3) This section shall not apply to a private
  
  company.
  (4) If a company acts in contravention of
  
  sub-section (1) or (2), the company, and every director of the company who
  
  willfully authorizes or permits the contravention, shall be punishable with
  
  fine which may extend to ten thousand rupees.
  (5) Where a statement in lieu of prospectus
  
  delivered to the Registrar under sub-section (1) includes any untrue statement,
  
  any person who authorized the delivery of the statement in lieu of prospectus
  
  for registration shall be punishable with imprisonment for a term which may
  
  extend to two years or with fine which may extend to fifty thousand rupees or
  
  with both, unless he proves either that the statement was immaterial or that he
  
  had reasonable ground to believe, and did up to the time of the delivery for
  
  registration of the statement in lieu of prospectus believe, that the statement
  
  was true.
  (6) For the purposes of this section
  (a) a statement included in a statement in
  
  lieu of prospectus shall be deemed to be untrue if it is misleading in the form
  
  and context in which it is included ; and
  (b) where the omission from a statement in
  
  lieu of prospectus of any matter is calculated to mislead, the statement in
  
  lieu of prospectus shall be deemed, in respect of such omission, to be a
  
  statement in lieu of prospectus in which an untrue statement is included.
  (7) For the purposes of sub-section (5) and
  
  clause (a) of sub-section (6), the expression " included ", when used
  
  with reference to a statement in lieu of prospectus, means included in the
  
  statement in lieu of prospectus itself or contained in any report or memorandum
  
  appearing on the face thereof, or by reference incorporated therein, or issued
  
  therewith.