Power of company to pay commissionsF3N.I.

107.—(1) It is 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 the following conditionsF1 are satisfied.

(2) The payment of the commission must be authorised by the company's articles; and—

(a)the commission paid or agreed to be paid must not exceedF1 10 per cent. of the price at which the shares are issued or the amount or rate authorised by the articles, whichever is the less;F2 and

F2(b)the amount or rate per cent. of commission paid or agreed to be paid, and the number of shares which persons have agreed for a commission to subscribe absolutely, must be disclosed in the manner required by paragraph (3).

F2(3) Those matters must, in the case of shares offered to the public for subscription, be disclosed in the prospectus; and in the case of shares not so offered—

(a)they must be disclosed in a statement in the prescribed form signed by every director of the company or by his agent authorised in writing, and delivered (before payment of the commission) to the registrar for registration; and

(b)where a circular or notice (not being a prospectus) inviting subscription for the shares is issued, they must also be disclosed in that circular or notice.

F2(4) If default is made in complying with paragraph (3)(a) as regards delivery to the registrar of the statement in prescribed form, the company and every officer of it who is in default is liable to a fine.