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

Suggested actions for addressing phoenix activity, Q. Suggested actions for...

Q. Suggested actions for addressing phoenix activity? The following actions are suggested for addressing phoenix activity. Those that have been suggested are the actions that:

Personal property security act, You act for Fred who is the secured lending...

You act for Fred who is the secured lending manager of BigBank. He has a troublesome customer, Macs Tires Pty Ltd. This is a family run tire business with three directors. The prin

Void contracts - law of contract, Void Contracts - Law of Contract Whe...

Void Contracts - Law of Contract Whereas  the Infant's Relief Act 1874 of the UK applies to the US as a statute of general application such was in force in the UK on date 12 A

Owning of property, Owning of Property:                       Under Ac...

Owning of Property:                       Under Act of a registered company, as a person, has power to own movable and immovable property. It can actually do so if it can affo

What is the european law, What is the European law? European law: ...

What is the European law? European law: Designed to make a single market for European member states to trade freely all along with each but has as moved onto a closer tie

Explain clause compromis and clause compromissoire, Question 1: Define,...

Question 1: Define, distinguish and discuss the limits of each of the following mechanism of Alternative Dispute Resolution, namely; (a) Conciliation; and (b) Negotiation.

What are the right of confiscation and seizure, UNCTOC gives the right of C...

UNCTOC gives the right of Confiscation and Seizure to individual states. " 1. States Parties shall adopt, to the greatest extent possible within their domestic legal systems,

Discuss how the law deals with computer crime, Question 1: (a) A contra...

Question 1: (a) A contract is valid as soon as the parties agree on its terms. According to you, is this statement correct? Justify your answer with the relevant enactment/cas

Legislative framework governing employment law in mauritius, QUESTION 1 ...

QUESTION 1 Discuss the legislative framework governing employment law in Mauritius. QUESTION 2 Pam works as a technician at Continent Ltd. During the few past weeks, Pa

Income statement, Frantic Fast Foods had earnings after taxes of $420,000 i...

Frantic Fast Foods had earnings after taxes of $420,000 in 2012 with 309,000 shares outstanding. On January 1, 2013, the firm issued 20,000 new shares. Because of the proceeds from

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