For the purpose of the foregoing provisions of this Part -

-tion of provisions

relating to (a) a statement included in an offer document shall be deemed to be untrue if it is misleading in the form and context in which it is included; and

offer documents

(b) a statement shall be deemed to be included in an offer document if it is contained therein or in any report or memorandum ap-pearing on the face thereof or by reference incorporated therein or issued therewith.

Allotment

Requirem- 54. Requirements as to allotments of shares or debentures pursuant to the issue of an offer document, the effect of irregular allotments and other related matters shall be as prescribed from time to time in regula-tions made by the Minister for the time being responsible for finance, or by the Capital Markets and Securities Authority or such other authority designated for the purpose.

ents as to allotments

55.-(1) Whenever a company limited by shares or a company lim-ited by guarantee and having a share capital makes any allotment of its shares, the company shall within sixty days thereafter deliver to the registrar for registration

-Return as to allot-ments

(a) a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses and descriptions of the allottees, and the amount, if any, paid or due and payable on each share; and

(b) in the case of shares allotted as fully or partly paid up other-wise than in cash, a contract in writing constituting the title of the allottees to the allotment together with any contract of sale, or for services or other consideration in respect of which that allotment was made, such contracts being duly stamped, and a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted.

(2) Where such a contract as above-mentioned is not reduced to writ-ing, the company shall within sixty days after the allotment deliver to the Registrar for registration the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing, and those particulars shall be deemed to be an instrument within the meaning of the Stamp Duty Act, and the registrar may as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section 37 of that Act.

Act No. 20 of 1972

(3) If default is made in complying with this section, every officer of the company who is in default shall be liable to a default fine.

Commissions and Discounts, Financial Assistance

56.-(I) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company if

-Power to pay certain commis-sions, and prohibi-tions of payment of all other

(a) the payment of the commission is authorised by the articles;

commis-sions,

dis-(b) the commission paid or agreed to be paid does not exceed ten counts, etc.

per cent of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is the less;

(c) the amount or rate per cent of the commission paid or agreed to be paid is in the case of shares offered to the public for sub scription, disclosed in the offer document; and

(d) the number of shares which persons have agreed for a commis-sion to subscribe absolutely is disclosed in the manner afore-said.

(2) Save as aforesaid, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commis-sion, discount or allowance, to any person in consideration of his sub-scribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure sub-scriptions, whether absolute or conditional, for any shares in the corn-pany, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the con-tract 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.

(3) Nothing in this section shall affect the power of any company to pay such brokerage as it has prior to the appointed day been lawful for a company to pay.

(4) A vendor to, promoter of, or other person who receives payment in money or shares from a company shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.

Prohibition of provi-sion of fi-nancial as-sistance by company for pur-chase or subscrip-tion for its

57.-(I) Subject as provided in this section, it shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of or for any shares in the company, or, where the company is a subsidiary company, in its

holding company:

own, or its

holding Provided that nothing in this section shall be taken to prohibit

-company's shares

(a) where the lending of money is part of the ordinary business of a company, the lending of money by the company in the ordinary course of its business:

(b) the provision by a company, in accordance with any scheme for the time being in force, of money for the purchase of, or sub-scription. for, fully paid shares in the company or its holding company or any subsidiary of it or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees or former employees or the dependants of any of them of the company or any such other company, including any director holding a salaried employment or office in the company or any such other company;

the making by a company of loans to persons other than direc-tors, bona fide in the employment of the company with a view to enabling those persons to purchase or subscribe for fully paid shares in the company or its holding company to be held by themselves by way of beneficial ownership;

(c)

(d) the lawful distribution by a company of any of its assets by way of dividends or otherwise.

(2) If a company acts in contravention of this section, the company and every officer of the company who is in default shall be liable to a fine.

(3) The Capital Markets and Securities Authority may certify that the provisions of subsection (1) shall not apply to a company in respect of any particular transaction.

(4) This section shall not apply to private companies.

Construction of References to Offering Shares or Debentures to the Public

58.-Any reference in this Act to offering shares or debentures to the public shall, subject to any provision to the contrary contained therein,

Construc-tion of ref-erences to

be construed as including a reference to offering them to any section of the public, whether selected as members or debenture holders of the

debentures

company concerned or as clients of the person issuing the offer docu-ment or in any other manner, and references in this Act or in a compa-ny's articles to invitations to the public to subscribe for shares or

deben-to the pub-lic

tures shall, subject as aforesaid, be similarly construed.

offering shares or

(2) Subsection (1) shall not be taken as requiring any offer or invita-tion to be treated as made to the public if it can properly be regarded, in all the circumstances, as not being calculated to result, directly or indi-rectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation, or otherwise as being a domestic concern of the persons making and receiving it, and in particular a provision in a company's articles prohib-iting invitations to the public to subscribe for shares or debentures shall not be taken as prohibiting the making to members or debenture holders of an invitation which can properly be so regarded.

(3) An offer of shares or debentures for subscription or sale to any person whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, shall not be deemed an offer to the public for the purposes of this Part.

Issue of Shares at Premium and Discount and Redeemable Shares 59.-(I) Where a company issues shares at a premium whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called ''the share premium account'', and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid up share capital of the company.

Applica-tion of premiums received on issue of shares

(2) The share premium account may, notwithstanding anything in sub-section (1), be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares, in writing off

-(a) the preliminary expenses of the company; or

(b) the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company,

or in providing for the premium payable on redemption of any redeem-able shares or of any debentures of the company.

(3) Where a company has before the appointed day issued any shares at a premium, this section shall apply as if the shares had been issued after the appointed day:

Provided that any part of the premiums which has been so ap-plied that it does not at the appointed day form an identifiable part of the company's reserves shall be disregarded in determining the sum to be included in the share premium account.

60.- (1) Subject as provided in this section, it shall be lawful for a company to issue at a discount shares in the company of a class already issued:

Power to issue shares at a

discount

Provided that

-the issue of -the shares at a discount must be authorised by reso-lution passed in general meeting of the company, and must be sanctioned by the court;

(a)

(b) the resolution must specify the maximum rate of discount at which the shares are to be issued;

not less than one year must, at the date of the issue, have elapsed since the date on which the company was entitled to commence business;

(c)

(d) the shares to be issued at a discount must be issued within one month after the date on which the issue is sanctioned by the court or within such extended time as the court may allow.

(2) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the court for an order sanctioning the issue, and on any such application the court may make an order sanctioning the issue on such terms and conditions as it thinks fit.

(3) Every offer document relating to the issue of the shares must con-tain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the offer document.

(4) If default is made in complying with this subsection, the com-pany and every officer of the comcom-pany who is in default shall be liable to a default fine.

61.-(I) Subject to the provisions of this section, a company limited by shares may, if so authorised by its articles, issue shares which are, or at the option of the company are to be liable, to be redeemed:

Power to issue redeern-able shares

Provided that

-(a) no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the pur-poses of the redemption;

(b) no such shares shall be redeemed unless they are fully paid;

(c) the premium, if any, payable on redemption, must have been provided for out of the profits of the company or out of the company's share premium account before the shares are re-deemed;

(d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall out of profits which would otherwise have been available for dividend be transferred to a reserve fund to be called ''the capital redemption reserve fund'', a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid up share capital of the company.

(2) Subject to the provisions of this section, the redemption of shares may be effected on such terms and in such manner as may be provided by the articles of the company.

(3) The redemption of shares under this section by a company shall not be taken as reducing the amount of the company's authorised share capital.

(4) Where in pursuance of this section a company has redeemed or is about to redeem any shares, it shall have power to issue shares up to the nominal amount of the shares redeemed or to be redeemed as if those shares had never been issued, and accordingly the share capital of the company shall not for the purpose of any enactments relating to tax on nominal capital be deemed to be increased by the issue of shares in pursuance of this subsection:

Provided that, where new shares are issued before the redemption of old shares, the new shares shall not, so far as relates to tax on nominal capital, be deemed to have been issued in pursuance of this subsection unless the old shares are redeemed within one month after the issue of the new shares.

(5) The capital redemption reserve fund may, notwithstanding any-thing in this section, be applied by the company in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

Miscellaneous Provisions as to Share Capital

62. A company, if so authorised by its articles, may do any one or