Commonwealth Numbered Acts

COMPANIES ACT 1981 No. 89 of 1981 - SECT 110

Division 2-Restrictions on Allotment and Variation of Contracts

110. (1) A company shall not make an allotment of shares in the company that
have been offered to the public or in respect of which an invitation has been
issued to the public unless-

   (a)  the minimum subscription has been subscribed; and

   (b)  the sum payable on application for the shares so subscribed has been
        received by the company.

(2) For the purposes of sub-section (1), where a company has, whether before
or after the commencement of this Act, received a cheque for the sum payable
on application for an allotment of shares in the company, the sum shall be
deemed not to have been received by the company until the cheque is paid by
the bank on which it is drawn.

(3) In ascertaining for the purposes of sub-section (1) whether the minimum
subscription has been subscribed in relation to an allotment of shares, there
shall, in respect of each share for the allotment of which an application has
been made, be deemed to have been subscribed an amount equal to the sum of-

   (a)  the nominal value of that share; and

   (b)  if the share is, or is to be, issued at a premium-the amount of the
        premium payable on the share, less any amount payable otherwise than
        in cash.

(4) Except in the case of a no liability company, the amount payable on
application for each share that has been offered to the public or in respect
of which an invitation has been issued to the public shall be not less than 5%
of the nominal amount of the share.

(5) If the conditions referred to in paragraphs (1) (a) and (b) have not been
satisfied on the expiration of 4 months after the issue of the prospectus, the
company shall repay, in accordance with the succeeding provisions of this
section, all money received from applicants for shares.

(6) Where a company is liable, under sub-section (5), to repay money received
from applicants for shares-

   (a)  the money shall be repaid without interest within 7 days after the
        company becomes so liable; and

   (b)  if the money is not repaid within 7 days after the company becomes so
        liable-

        (i)    the directors of the company are, subject to sub-section (7),
               jointly and severally liable to repay the money with interest
               at the rate of 8% per annum (or if another rate is prescribed,
               that other rate) calculated from the expiration of the period
               of 7 days; and

        (ii)   each director of the company is guilty of an offence.

Penalty: $2,500 or imprisonment for 6 months, or both.

(7) A director of a company is not liable under sub-paragraph (6) (b) (i), and
is not guilty of an offence under sub-paragraph (6) (b) (ii), if he proves
that the default in the repayment of the money was not due to any misconduct
or negligence on his part.

(8) An allotment made by a company to an applicant in contravention of the
provisions of this section is voidable at the option of the applicant and is
so voidable notwithstanding that the company is in the course of being wound
up.

(9) An option referred to in sub-section (8) is exercisable by notice in
writing served on the company-

   (a)  in the case of an allotment made by a company that is not required to
        hold a statutory meeting-within one month after the date of the
        allotment; and

   (b)  in the case of an allotment made by a company that is required to hold
        a statutory meeting-

        (i)    if the company holds the statutory meeting within the period
               specified in sub-section 239 (1)-within one month after the
               date of the allotment or the holding of the statutory meeting,
               whichever is the later; or

        (ii)   if the company fails to hold the statutory meeting within that
               period-within one month after the expiration of that period or
               the date of the allotment, whichever is the later.

(10) A director of a company who knowingly contravenes, or permits or
authorizes the contravention of, any of the provisions of this section is
guilty of an offence and is liable, in addition to the penalty or punishment
for the offence, to compensate the company and any person to whom an allotment
has been made in contravention of this section respectively for any loss,
damages or costs that the company or the person has sustained or incurred by
reason of the allotment, but no proceedings for the recovery of any such
compensation shall be commenced after the expiration of 2 years from the date
of the allotment.

(11) Any condition requiring or binding an applicant for shares to waive
compliance with any requirement of this section, or purporting to do so, is
void.

(12) A company shall not allot or issue, and an officer or promoter of a
company or a proposed company shall not authorize or permit to be allotted or
issued, shares or debentures on the basis of a prospectus after the expiration
of 6 months from the issue of the prospectus.

Penalty: $2,500 or imprisonment for 6 months, or both.

(13) Where an allotment or issue of shares or debentures is made on the basis
of a prospectus after the expiration of 6 months from the issue of the
prospectus, the allotment is not, by reason only of that fact, voidable or
void.