PROSPECTUS AND ALLOTMENT 47
which he is liable to pay in cash, an amount equal to the
amount per share payable by the public on application and
allotment (s. 94).

6. A statutory declaration by the secretary or one of the
directors in the prescribed form (see Companies (Forms)
Order, 1929, Form 43), must be filed with the Registrar (s. 94).
This declaration vouches the following facts: (a) the amount
offered for public subscription; (b) the amount of the minimum
subscription; (c¢) the allotment of a number of shares not
less than the minimum subscription; (4) the payment by
every director of application and allotment money.

Thereupon the Registrar is to issue his certificate entitling Registrar’s

the company to commence business, the certificate being Certificate.
conclusive evidence that the company is so entitled [s. 94 (3)].
It is important to remember that contracts made by a com-
pany before the date at which it is entitled to commence
business are provisional only, but become binding on that
date [s. 94 (4)). Consequently, if a company is wound up
before it becomes entitled to commence business, it is not
liable on any of its contracts [Otto Electrical Manufacturing
Co. (1906), 2 Ch. 390]. Although the company, before
obtaining a certificate entitling it to commence business,
may not exercise its borrowing powers, it may nevertheless
offer to the public debentures, simultaneously with the offer
of shares, may receive application money on debentures,
and may allot both shares and debentures {s. 94 (5)].

If a company does not issue a prospectus on or with refer-
ence to its formation, but desires to be in a position to allot
shares, commence business and exercise its borrowing powers
without making a public issue of shares. the necessary forma-
lities are as follows:

I. A statement in lieu of prospectus must be filled up, and
signed by every person named therein as a director or pro-
posed director of the company, or by his agent authorised in
writing, and filed with the Registrar. The form of the
statement in lieu of prospectus, showing the particulars it
must contain is to be found in the fifth schedule to the Act
[s. 40 (1), 94 (2)]. The restriction on naming a person as a
director or proposed director in a prospectus imposed by s.

140 (1) apply (supra p. 45) apply also to a statement in lieu o’
prospectus.

The particulars required by s. 40 are to a great extent gtatement
identical with those which a prospectus is required to contain in lieu of
by s. 35 and the fourth schedule of the Act; but the draftsman Prospectus.
of a statement-in-lieu of prospectus must adhere to the form
set forth in the fifth schedule.

Commence-
ment of
Business,
where no
Public Issue.