QUESTION: WHEN AND FOR WHAT PURPOSE; (a) STATUTORY MEETING,(b)ORDINAARY OR ANNUAL

GENERAL MEETING AND (C) EXTRA ORDINAARY MEETING ARE CONVENED . DISCUSS FULLY.

There are three kinds of meeting under Companies Ordinance,1984, Which are Statutory meeting,
Annual General Meeting and Extra Ordinary General Meeting.
DEFINITION OF MEETING: “An assembly of two or more persons for the purpose of discussing
and acting upon some matters in which they have a common interest”.
ESSENTIALS OF A VALID COMPANY MEETING.
i) Must be properly convened.
ii) Must be Convened by the proper authority.
iii) Notice must be served.
iv) Must be properly constituted.
v) Required Quorum must be present.
vi) Proper person must be in chair.

KINDS OF MEETINGS:
(a) Statutory meeting U/S 131.

(a) Definition: Every company limited by shares and every company limited by
guarantee and public company having the share capital shall, within a period of not
less than three months, nor more than Six months from the date at which the
company is entitled to commence business, hold a general meeting of the members
of the company, which shall be called “the statutory meeting”.
(b) Statutory Report: U/S 131(3) The directors shall, at least twenty-one days before the
date on which the meeting is held, forward a report, under this Act, referred as “the
statutory report” to every member, as declared under clause (a to g )
(c) Statutory report certified: The statutory repost shall be certified by not less than
director, one of whom shall be the chief executive of the company.(CEO)
(d) Object of statutory report: The statutory report shall also contain a brief account of
the state of the company’s affairs (under section 131 sub-clause 3 to 10) since its
incorporation and the business plan, including any change or proposed change
affecting the interest of shareholders and business prospects of the company.
(e) Certificate of the auditors: The statutory report shall, so far as it relates to the
shares allotted by the company, the cash received in respect of such shares and to
the receipts and payments of the company, be accompanied by a certificate of the
auditors of the company as to the correctness of such allotment, receipts of cash,
receipts and payments.
(f) Director to send report: The directors shall cause at least five copies of the statutory
report, certified as aforesaid, to be delivered to the registrar for registration
forthwith after sending the report to the members of the company.
(g) Commencement of Meeting: The directors shall cause a list showing the names,
occupations, nationality and addresses of the members of the company, and the
number of shares held by them respectively, to be produced at the commencement
of the meeting and to remain open and accessible to any member of the company
during the continuance of the meeting.
(h) Privileges of the Members: The members of the company present at the meeting
shall be at liberty to discuss any matter relating to the formation of the company or
arising out of the statutory report, whether previous notice has been given or not,
but nor resolution of which notice has not been given in accordance with the articles
may be passed.
(i) Adjournment of Meeting: The meeting may adjourn from time to time and at any
adjourned meeting any resolution of which notice has been given in accordance with
articles, either before or after the original meeting, may be passed, and an
adjourned meeting shall have the same powers as an original meeting.
(j) Penalty for non-conducting of Statutory Meeting. If the default relates to a listed
company: to a fine not less than ten thousand rupees and not exceeding twenty
thousand rupees and in the case of a continuing default to a further not exceeding
two thousand rupees for every day after the first during, which the default
continues; and
If the default relates to any other company, to a fine not exceeding
five thousand rupees and in the case of a continuing default to further fine not
exceeding two hundred rupees for every day after the first during which the default
continues.
ii) ANNUAL GENERAL MEETING U/S 132. Every company, shall hold in addition to
any other meeting, a general meeting, as its annual general meeting, within sixteen
months from the date of its incorporation and thereafter once in every calendar year
within a period of four months following the close of its financial year.
a) An annual general meeting in case of a listed company: An annual general
meeting shall, in the case of a listed company, be held in the town in which the
register office of the company is situated. Provided that the commission, for any
special reason, may on the application of such company, allow the company to
hold a particular meeting at any other place.
b) Notice: The notice of an annual general meeting shall be sent to the
shareholders at least twenty-one days before the date fixed for the meeting and,
in the case of a listed company, such notice in addition to it being dispatched in
the normal course, shall also be published at least in one issue each of a daily
newspaper in English Language and a daily newspaper in Urdu Language having
circulation in the province in which the stock exchange on which that listed
company is situated.
c) Default mode: If default is made, the company and every officer of the company
who is knowingly and willfully a party to the default shall be liable;
 i. If the default relates to a listed company, to a fine not less than twenty
thousand rupees and not exceeding fifty thousand rupees and to a
further fine not exceeding two thousand rupees for every day after the
first during which the default continues; and
ii. If the default relates to any other company, to a fine not exceeding ten
thousand rupees and to a further fine not exceeding five hundred rupees
for every day after the first during which the default continue.
(iii) EXTRA-ORDINARY GENERAL MEETING U/S 133.
(a) Definition: All general meetings of a company, other than the annual general meeting
referred to in section 132 and the statutory meeting mentioned in section 131, shall be called
extraordinary general meeting.
(b) The Requisition: The requisition shall state the objects of the meeting, be signed by the
requisitions and deposited at the registered office of the company, and may consists of several
documents in like form, each signed by one or more requisitions.
(c) Where director fails to call the meeting: If the directors do not proceed within twenty one
days from the date of the requisition being so deposited to cause a meeting to be called, the
requisitions or a majority of them in value, may themselves call the meeting, but in either case
any meeting so called shall be held within three months from the date of the deposit of the
requisition.
(d) Notice: Notice of an extraordinary general meeting shall be sent to the members at least
twenty-one days before the date of the meeting, and in the case of a listed company shall also
be published.
(e) Penalty: Every officer of the company who knowingly or willfully fails to comply with any of
the provision of this section shall be liable.
i. If the default relates to a listed company, to a fine not less than ten thousand
rupees and not exceeding twenty thousand rupees and in the case of a continuing default to a
further fine which may extend to two thousand rupees for every day after the first during which
the default continues; and
ii. If the default relates to any other company, to a fine which may extend to two
thousand rupees and in the case of a continuing default to a further fine which may extend to
two hundred rupees for every day after the first during which the default continues.
We can say that, there are three kinds of meetings under the companies Act 2017, which are
Statutory Meeting, Annual General Meeting and Extra Ordinary General Meeting. They all have
their own importance for running the business of the company.
QUESTION: EXPLAIN THE TERM PROMOTER OF A COMPANY. WHAT ARE THEIR DUTIES AND
LIABILITIES HOW ARE THEY REMUNERATED?
“The term promoter is a term not of law, but of business usefully summing up in a single
word a number of business operations familiar to the commercial world, by which a company is
generally brought into existence”.
DEFINITION OF PROMOTER: A promoter is a person who undertakes to form a company with
reference to given object and to set it going and float the company. So we can say that “One
who undertakes form a company with reference to given project and to set it going, and who
takes the necessary steps to accomplish the purpose”.
WHO MAY CALLED PROMOTERS: The promoter is a person who has to draft the following
documents.
(i) Memorandum of Association with its essentials.
(ii) Articles of Association with its essentials.
(iii) Preliminary contracts if there is any.
(iv) Under writing agreements if necessary.
(v) Prospectus with its essential contents.
DUTIES OF PROMOTERS:
(i) Duty to disclose material defects.
(ii) Duty to chalk out the structure of the company.
(iii) Duty to chose first director of his own choice.
(iv) Duty to settle the terms of the Memorandum of Association.
(v) Duty to select Bank, Brokers and Legal Advisors.
(vi) Duty to select Auditors.
(vii) Duty to draft prospectus of company.
(viii) Duty to register company.
(ix) Duty to secure allotment of shares.
(x) Duty to obtain certificate of commencement of business.
(xi) Duty to arrange office, factory, machinery and staff of the company.
(xii) Duty not to make secret profits.
(xiii) Duty to account to the company for the benefit of any subsequent contract.
(xiv) Duty not to exercise undue influence.

FUNCTION OF A PROMOTER:
A promoter has to chalk out the structure of the company, whether it is
to be a big concern or a small one, he must decide the type of business or the object
to be done by the company. He must decide about the capital required, value,
number and kinds of the shares, ways and methods of production. He has to
consider the new developments of demand and new facilities for transport etc. For
the profitable investment.
 RIGHTS OF PROMOTERS:
(i) Right to get reasonable remuneration.
(ii) Right to recover, preliminary expense from the company.
(iii) Right to receive the proportionate money from co-promoters.

MEASURES OF PROMOTER:
The promoter must adopt the following measures;
(i) He must secure control over key elements needed for the successful development of
the company.
(ii) He must secure his own interest.
(iii) He must give sufficient security and income potential to attract necessary financing
from investors.
(iv) It is his duty to decide about the terms and conditions to be written in the
Memorandum and Articles of Association of the company.

FIDUCIARY RELATIONSHIP:
The promoter has fiduciary relationship with the company. If he makes any profit in
any transaction with the company without disclosing it, he is bound to make over
such profit to the company. He is in a position of trustee so for the company is
concerned, and he cannot use his position for his personal gains or interests.
If the promoter disclose the nature of his profit, or interest or
advantage which he is going to obtain, so he is not guilty of anything undesirable
and he can retain such profit or interest or gain or advantage.
The fiduciary relationship at once beings with the formation of
the company. If with some reason or the other the company does not get the
certificate of incorporation from the Registrar, the promoters of the company shall
not become liable for any secret profits made by the promoters.

REMEDIES FOR BREACH OF DUTY:

(i) Rescission
(ii) Recovery of secret profit.
(iii) Damages for Breach of Fiduciary Duty.
(iv) Damage for deceit.

We can say that, promoter of the company is a person who takes initiative in
the formation of the company. He prepare legal documents of the company in which includes
Memorandum of Association, Articles of Association and prospectus etc.
QUESTION: GIVE THE MAJORITY AND PERIOD OF NOTICE REQUIRED IN ORDER TO VALIDITY
PASS.
MEANING OF RESOLUTION:
(i) Fixed determination
(ii) A formal decision passed by a Public body.

KINDS OF RESOLUTION:
(a) Special Resolution
(b) Ordinary Resolution
(c) Extra Ordinary Resolution.

(i) ORDINARY RESOLUTION:

It is passed by simple majority of the members in any kind of General Meeting.
(a) Notice. 14days notice must sent by each member.
(b) Functions (Aijanda).
(i) Declare the Dividend,
(ii) Appointment of Auditors and Directors,
(iii) Determine the remuneration of auditors,
(iv) Removal of Managing agents.

(ii) Special Resolution

It is passed by at least 3/4th majority of the members by voting in General Meeting of
share-holders.
(a) Notice. 21days notice required for the meeting in which such resolution
is passed.
(b) Functions (Aijanda).

(i) Change in the name of the company,

(ii) Change in the Articles of the company,
(iii) Change in the Memorandum of company.

(c) Transfer the registered office from one Province to another Province.
(d) Convert private company into Public company.
 (iii)Extra Ordinary Resolution:
It is passed by 3/4th majority of the share-holders.
(a) Notice.
14days notice must sent to each members. Copy of such resolution is
also sent along with the notice.

(b) Functions (Aijanda)

(i) Appointment and removal of directors of the company.

(ii) Settlement between the company and its share-holders.

QUESTION: DEFINE A DEBENTURE? STATE ITS CONTENTS, ALSO DISCRIBE THE KINDS OF
DEBENTURES? DIFFERENCE BETWEEN DEBENTURE AND SHARE? DIRRERENCE BETSWEEN
DEBENTURE HOLDER AND SHARE HOLDERS?
A debenture means a document which either creates a debt or acknowledges it, and any
document which fulfils either of these conditions is a debenture. Debentures are bonds, or
deeds which evidence the loan, and if they purport to give a charge, create the security for its
repayment. Debentures usually give the debenture-holders a mortgage or charge on the
company’s property to secure the loan, in which case, if the company fails to repay the loan,
the debenture-holder shall have the usual remedies of a mortgagee against the property
mortgaged.
MEANING OF DEBENTURE:
Debenture means “an instrument under seal evidencing
a debt, the essence of it being the admission on indebtedness”.
DEEFINITIO OF DEBENTURE:
Debenture includes debenture stock, bounds, term
finance certificate and any other securities, other than a share, of a company, whether
constituting a charge of the assets of the company. No precise definition of the word
“debentures” can be found, but various forms of instrument are called debentures.

FEATURES OF DEBENTURES:
(i) A document contain an acknowledgement of indebtedness.
(ii) It does give a charge and assets of the company.
 (iii) It is a document under company’s seal acknowledging indebtedness for a capital
sum.
(iv) It is always for a specified sum e.g rupees one thousand which can only be
transferred in its entirety.
(v) It may be secured or unsecured.
(vi) It may be collaterally secured by a trust deed.

KINDS OF DEBENTURES:

(i) Ordinary Debentures.

These are also called Naked debentures. These kinds of
debentures are issued without security. The holders of these debentures are
considered insecure creditors at the time of winding up of the company. So these are
not popular in present days.
(ii) Redeemable Debentures:
The amount of these debentures are repayable after a stated
period. These are issued subject to the condition that the company shall redeem
them on specified date. These debentures are very common now-a-days.
(iii) Irredeemable Debentures:
The amount of such loan is repayable on the happening of
specified contingencies. Generally no time is fixed within which the company is
bound to redeem them.
(iv) Mortgage Debentures:
The debentures which are secured on the permanent asset of
the company such as plant, Machinery, Land and Building are known as Mortgage
Debentures. These are two kinds of Mortgage Debentures i.e

(a) First Mortgage Debentures.

The First Mortgage Debentures holders have first right to claim
on the property of the company.

(b) Second Mortgage Debentures:

Second Mortgage debenture holders have second right to
claim on the assets of company.

(v) Registered Debentures:

The name and addresses of registered debenture holders are
recorded in the Register of the company. Transfer and Transmission of these
must be registered in the books of the company as in the case of shares. Interest
is paid to the registered holder in the same manner as distribution of dividend.
(vi) Bearer Debentures :
These are payable to bearer. The documents are negotiable
instruments and are transferable by simple delivery. Interest is generally payable
(vii) Convertible Debentures:
These debentures may be converted into preference or ordinary
shares of company. This option is given to such debenture holder of the period stated
in the conditions of the issue. So this provision protects the investors.
(viii) Floating debentures:
Such type of debentures are secured by a floating charge on all the
assets of the company. These assets may be bills Receivable, Stock and Book Debts. It
creates a charge upon them in favour of debenture holders as against other creditors
in case of failure on the part of the company.
(ix) Equipment Trust debentures :
These debentures are issued for specific purposes. Funds are raised
by such debentures to purchase certain Equipment for the running life of the
business.
(x) Income debentures:
The holders of these type of debentures are entitled to receive
interest at a fixed rate only out of the current year’s profit. If company gains no-
profit, no-interest will be payable. So these debentures are not popular now-a-days.
(xi) Legal Debentures:
Where the title of the property of the company may be transferred
by deed to money lenders as security for the loan, they are known as legal
debentures.

DIFFERENCE BETWEEN DEBENTURE AND SHARE:

(a) REPRESENTATION:

(i) Share:-- Share represents “a Share in the share

capital of the company.
(ii) Debenture:- It is represents the acknowledgement of
debts of the company.

(b) POSITION:

(i) Share:-- Share-holders are the owners of the

company in share.
 (ii) Debenture:- Actually debentures are not owners but
are considered as creditors of the company.

(c) PARTICIPATION:
(i) Share:-- Share-holders have right to participate
In the management of the company, through
Board of Directors.
Debenture:- Debenture cannot conduct the
management of the company, neither directly nor
indirect.

(d) NATURE OF SECURITIES:

(i) Share:--- As the shares are not issued against the
Charge of any property of the company these are
Considered insecured.
(iii) Debenture:- As the assets of the company may be
Charged against the loans, debentures are regarded
Secured security.

DIFFERENCE BETWEEN SHARE-HOLDERS AND DEBENTURES HOLDERS.

(a) (a) INVESTMENT RETURN.
(i) Share-holder:- Share-holders have got right to
participate in the profit of the company at the specific of
variable rate.
(ii) Debentures holder: Debenture holders have got right to
enjoy interest at the fixed rate.
(b) WITHDRAWAL RIGHT.
(i) Share-holder:- Share-holders cannot withdraw
their share capital unless the company goes into
liquidation or decides to reduce its share capital.
(ii) Debenture holder:- The amount of the debenture is
returnable after the expiry of the specific period.
 (c) JUSTIFICATION:
(i) Share-holders:- The process of distribution of
Dividend or loss among the share-holders may be
Justified in Islam.
(iii) Debenture-holder:- As debenture holders have to
receive interest irrespective of the profit or loss, it cannot
be justified in Islam.

(d) RECORDS POSITION:

(i) Share-holder:- The rights and power of the
share-holders are laid down in Articles of Association.
(ii) Debenture-holders:- The rights and power of
debenture holders are mentioned in the certificate, issued
at the time of accepting loans.
(e) AT THE TIME OF LIQUIDATION:
(i) Share-holder:- Share-holders have got second
right in regard to repayment of capital if there is any
balance at the time of winding up of the company.
(ii) Debenture holder:- In case of liquidation, debenture
holders have first right to get back their amount from the
company.
We can say that, debenture is a document which either creates or
acknowledge a debt. Document may be a debenture although under its terms the debt is only
to be repaid out of a part of the profits. The term debenture is usually associated with a
company of some kind, and most debentures are securities given by companies, but they are
often granted by clubs and occasionally by individuals.

QUESTION: DEFINE “PROSPECTUS”? WHAT ARE THE LIABILITIES BOTH CIVIL AND CRIMINAL
WHICH ARISES AS RESULT OF AN UNTRUE STATEMENT IN A PROSTECTUS? DIFFERENCE
BETWEEN PROSPECTUS AND STATEMENT IN LIEU OF PROSPECTUS
A prospectus is a document which is prepared by the promoter of the company. Only a public
company can make invitation to the public to subscribe for shares or debentures. A private
company, on the other hand, has to raise capital privately etc., from the members or a financial
institution etc.
 MEANING OF PROSPECTUS:
Literal Meaning:
The outlines of any plan/a scheme submitted for the information of the public.
Legal Meaning:
“A printed document that describes the main features of an enterprise/company
and that is distributed to prospective buyers or investor; especially a written description of
securities offering.
DEFINITION OF PROSPECTUS:
“Prospectus means any document described or issued as prospectus and includes any notice,
circular, advertisement or other communications inviting offers from the public for the
subscription or purchase of any shares in or debentures of a body corporate.
CONTENTS OF PROSPECTUS:
It is on the basis of the statement made in the prospectus that the public takes shares or
debentures of the company. The company is required to provide in the prospectus, certain
information to enable the prospective investor to decide whether or not to subscribe for the
company’s shares or debentures. Legal requirements may be summed up as;
(i) Name and addresses of directors and the benefits they get as such;
(ii) Profit made be the promoters;
(iii) Capital required by the company in each;
(iv) Past financial records of the company;
(v) Preliminary contracts, commission and preliminary expenses;
(vi) Voting and dividend rights of each class of shares.

Every prospectus issued by or on behalf of a company or promoter must state the

matters specified in section 1 of Part 1 of 2nd schedule and set out the reports
specified in section 2 of that part. It should also be specified whether the prospects
is issued on the formation of the company or subsequently.

REGISTRATION OF PROSPECTUS;
One copy of a prospectus must be delivered to the Registrar before the
date of its publication. The prospectus must be accompanied by the consent in
writing of the person, if any, named therein as the auditor, legal adviser, attorney,
Soliciter, banker or broker, being a member of a stock exchange, of the company to
act in that company. The Registrar shall not register a company unless legal
requirements as contained in relevant provision have been complied with.
 Non-compliance with provisions of law before issuance of prospectus shall entail
fine not exceeding Rs 10,000. And in the case of continuing default to a further fine
not exceeding Rs 200 for every day from the date of issue until a copy thereof
complying with the requirements has been delivered to the Registrar.
DOCUMENTS ENDORSED OR ATTACHED WITH PROSPECTUS.

No prospectus shall be issued by or on behalf of a company unless it has endorsed thereon or

attached thereto.
Consent to the issue of the prospectus required by concerned law from any person as an
expert, and
In the case of a prospectus issued generally also;
A copy of every contract if reduced into writing;
If contract has not been reduced into writing, a memorandum giving full particulars thereof;
and
Where the persons making any report, have made therein or have without giving any reasons,
indicated therein, any adjustment, a written statement signed by those persons setting out the
adjustments and gibing the reasons therefor.

PERSON LIABLE FOR MIS-STATEMENT IN PROSPECTUS.

(i) A person who is a director at the time of issue of the prospectus.

(ii) Any person who has authorized himself to be named and is
named in the prospectus as a director.
(iii) Every person who is a promoter of the company; and
(iv) Every person who has given consent to the issue of the
prospectus.

DEFENCE AGAINST MIS-STATEMENT OF PROSPECTUS:

Where a director, promoter or person authorizing the issue of a prospectus is sued
for compensation, he may escape liability by proving the following facts;
(i) That he withdrew his consent to act as director before the issue of
the prospectus, and that it was issued without his authority or
consent;
 (ii) That the prospectus was issued without his knowledge or consent,
and on becoming aware of it, he gave public notice that it was so
issued;
(iii) That he became aware of the untrue statement in the prospectus
after it had been issued and before any allotment was made, he
withdrew is consent and gave public notice of such withdrawal with
reasons therefore; or
(iv) With regard to untrue state;
(a) That he believed, and had reasonable grounds to believe, upon
the time of the allotment that the statement was true.
(b) That the statement was fair and correct representation of a
statement by an expert or was contained in a correct copy of,
and he had reasonable ground to believe and did believe, upon
the issue of the prospectus that the expert was competent and
had given the consent and had not withdrawn such consent
before registration of a copy of the prospectus or to his
knowledge before allotment;
(c) That the statement was a fair and correct representation of an
official statement or copy or extract from an official document.

CIVIL LIABILITY FOR MIS-STATEMENT IN PROSPECTUS;

If people issue a prospectus and make untrue statement therein

will be liable to compensate those who suffer injury thereby.

CRIMINAL LIABILITY FOR MIS-STATEMENT IN PROSPECTUS.

Every person other than an expert who has merely given his
consent to the inclusion of a statement by him in the
prospectus who signs authorizes the issue of a prospectus
containing any untrue statement i-e misleading statement, is
liable to a fine up to Rs.10,000 or imprisonment for two years,
or both unless he proves;
(a) That he had reasonable ground to believe, and did believe
up to the time of issue of the prospectus that the statement
was true; or
(b) That the statement was immaterial.
STATEMENT IN LIEU OF PROSPECTUS.
A statement in lieu of prospectus may be defined as, a public document prepared, in the form
prescribed in the 2nd schedule to the Companies ordinance, by every such public company
which does not issue a prospectus on its formation, for filing with the Registrar before
allotment of shares or debentures, and signed by every person who is named therein as a
director or by his agent duly authorize d in writing.
LIABILITY ARISING FROM MIS-STATEMENT IN A STATEMENT IN LIEU OF PROSPECTUS:
The Companies Ordinance is silent as to the effect of mis-statement in a statement in lieu of
prospectus, but it would appear that if a person applying for shares inspect the statement in
lieu of prospectus, the statement becomes the basis of the contract, and if it contains a false
statement he may have a right to rescind. A person who subscribes for shares on the faith of
any statement contained in the statement in lieu of prospectus cannot, however, claim
compensation from the company’s directors and promoters. Any person who willfully makes a
false statement in the statement in lieu of prospectus is guilty of a criminal offence.
CONTENTS OF STATEMENT IN LIEU OF PROSPECTUS:
The statement in lieu of prospectus shall contain similar information as is required to be given
in a prospectus and shall include the following;
(i) Name of the company;
(ii) Statement of Capital ;
(iii) Description of business;
(iv) Names, addresses and occupations of directors, chief executive, managing agents
and secretary;
(v) Rights of voting conferred on several classes of shares;
(vi) Shares and debentures to lbe issued for consideration other than cash;
(vii) Names of vendors and details of property to be acquired for cash or shares or
debentures, specifying the goodwill to be paid for
(viii) Estimated preliminary expenses
(ix) Material contracts
(x) Director’s interest
(xi) Minimum subscription.
EFFECT OF INCORRECT STATEMENT:
Where a statement in lieu of prospectus delivered to the Registrar includes any
untrue statement, any person who signed or authorized the delivery of the
statement in lieu of prospectus for registration shall be punishable with
imprisonment up to 2 years, or with fine up to Rs.10,000 or with both. However, he
can escape this punishment by proving that;
(a) The statement was immaterial; or
(b) That he had reasonable ground to believe, and did up to the time of delivery for
registration of the statement in lieu of prospectus believe, that the statement
was true.
DIFFERENCE BETWEEN PROSPECTUS AND STATEMENT IN LIEU OF PROSPECTUS;
(i) Prospectus has been defined in section 2(51) but the statement in lieu of
prospectus has not been defined in the companies Ordinance.
(ii) The former is an invitation to the public for subscription or purchase of
shares of a company but the latter is not an invitation for such
subscription.
(iii) The directors or promoters are liable to compensate any person who
subscribes for shares (or debentures) on the faith of a prospectus for loss
or damage sustained by him on account of any misleading or untrue
statement appearing therein.
A person who subscribes for shares on the faith of
any statement contained in the statement in lieu of prospectus cannot,
however, claim compensation from the company‘s directors or
promoters.
(iv) No form of prospectus has been prescribed under
Companies Ordinance, but the statement in lieu of prospectus has to be
prepared in the Form I of Form II given in the Second Schedule to the
Companies Ordinance.