107.
| (1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers unless
| | (a) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription ; and | | |
| | (b) every director of the company has paid to the company on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription ; and | | |
| | (c) there has been delivered to the Registrar for registration a statutory declaration by the secretary or one of the directors, in the prescribed form, that the provisions of paragraphs (a) and (b) have been complied with. | | |
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| (2) Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless
| | (a) there has been delivered to the Registrar for registration a statement in lieu of prospectus; | | |
| | (b) every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash ; and | | |
| | (c) there has been delivered to the Registrar for registration a statutory declaration by the secretary or one of the directors in the prescribed form that the provisions of paragraph (b) have been complied with. | | |
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| (3) The Registrar shall, on the delivery to him of the statutory declaration under the provisions of paragraph (c) of subsection (2), and, in the case of a company which is required by this section to deliver a statement in lieu of prospectus, of such a statement, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled. |
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| (4) Any contract made by a company before the date on which it is entitled to commence 'business shall be provisional, and shall not be binding on the company until such date. |
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| (5) Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on application for debentures. |
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| (6) Where any company commences business or exercises borrowing powers, in contravention of the provisions of this section, every person who is responsible for the contravention shall, without prejudice to any other liability, be guilty of an offence and shall be liable to a fine not exceeding five hundred rupees for every day during which the contravention continues. |
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| (7) Nothing in this section shall apply to
| | (a) a private company ; or | | |
| | (b) a company registered before April 1. 1939. | | |
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Sri Lanka Consolidated Acts