54.
| (1) 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
| | (a) the payment of the commission is authorized by the articles; and | | |
| | (b) the commission paid or agreed to be paid does not exceed ten per centum of the price at which the shares are issued or the amount or rate per centum authorized by the articles, whichever is the less ; and | | |
| | (c) the amount or rate per centum of the commission paid or agreed to be paid is
| | | (i) in the case of shares offered to the public for subscription, disclosed in the prospectus ; or |
| (ii) in the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and delivered before the payment of the commission to the Registrar for registration, and, where a circular or notice, not being a prospectus, inviting subscription for the shares is issued, also disclosed in that circular or notice; and |
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| | (d) the number of shares which persons have agreed for a commission to subscribe absolutely is disclosed in a manner referred to in paragraph (c). | | |
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| (2) Save as provided in 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, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute of conditional, for any shares in the company, 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 contract price of any work to" be executed for the company, or that money be paid out of the nominal purchase money or contract price, or otherwise. |
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| (3) Nothing in this section shall affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay. |
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| (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 the provisions of this section. |
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| (5) Where default is made in complying with the provisions of this section relating to the delivery to the Registrar of the statement in the prescribed form, the company and every officer of the company who is in default shall be guilty of an offence and shall be liable to a fine not exceeding two hundred and fifty rupees. |
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Sri Lanka Consolidated Acts