Payment of underwriting commission - allotment of shares, Business Law and Ethics

Assignment Help:

Payment of Underwriting Commission:

A "commission" is defined by Osborn's Concise Law Dictionary as, inter alia "an agent's remuneration". Therefore purposes of company law, it denotes the amount of money paid by a company to a person "in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, meant for any shares in the company there or procuring may or agreeing just to procure subscriptions, where absolute or conditional, intended for any shares in the company"

Section 55 (1) of the Act allows a company to pay the commission if:-

a) the payment is authorized by the company's articles; and

b) the commission paid or agreed to be paid does not exceed 10% of the price at which the shares are issued or the amount or rate authorized by the articles, moreover is the less; and

c) furthermore the amount or rate per cent of the commission paid or agreed to be paid is -

i) in the case of shares offered to the public for subscribption, disclosed in the prospectus; or

ii) in the case of shares not offered to the public for subscription and disclosed in the statement in lieu of prospectus, or  may in Form No.225 signed by all the directors or their agents authorized in writing; and

d) the number of shares which it has been agreed to subscribe absolutely is disclosed in manner aforesaid.

Section 55 (2) provides that, except as provided by subsection (1), no company shall apply any of its shares or capital money, either directly or indirectly, in payment of any commission, discount or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, or procuring or agreeing to procure subscriptions, absolute or conditional, for any shares in the company, whether the shares or money be applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price, or otherwise.


Related Discussions:- Payment of underwriting commission - allotment of shares

Explain law making treaties, Explain Law making treaties Law making tre...

Explain Law making treaties Law making treaties are those treaties which come into existence because of lack of customary laws related to a particular issue and in order to mak

#title., What is hire purchase?

What is hire purchase?

Order of application of assets, Order of application of assets: The or...

Order of application of assets: The order of application of assets is therefore as follows: (a) secured creditors who have fixed charges are entitled to be paid out of thei

What is codifying treaty, What is Codifying treaty Codifying treaty, me...

What is Codifying treaty Codifying treaty, meaning whereby, certain existing customary laws are codified in order to develop international law and make it binding between the s

Illustrate the doctrine of judicial precedent, Illustrate the doctrine of j...

Illustrate the doctrine of judicial precedent? The doctrine of judicial precedent It states that higher court decision are binding on lower courts and like a result it i

Doctrine of stare decisis, Doctrine of Stare Decisis However the doctr...

Doctrine of Stare Decisis However the doctrine of "stare Decisis" or "judicial precedent" is a legal rule which utilized a judge to refer to the earlier cases decided through

Estate planning , Estate Planning Case Study Rich and his wife, Ruby, ...

Estate Planning Case Study Rich and his wife, Ruby, heard that you are an expert in the field of Estate Planning as a result of the superior education you received at WPU.  The

Contract for work and materials, Contract for Work and Materials In Ro...

Contract for Work and Materials In Robinson v Graves a dispute arose over an agreement below such an artist had promised to make a portrait about 250 guineas. So query had to

Illustrate the principle of authority or power, Illustrate the principle of...

Illustrate the principle of authority or power Authorities are delegated by the Principal to agents and it is the characteristic of all the governments. This delegation of auth

Describe in detail about the term - policy makers, Describe in detail abou...

Describe in detail about the - policy makers Elections are used to choose the policy makers, it is not the only mechanism. Since the authority to make decisions may be vested i

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd