Companies Act, 1973 (Act No. 61 of 1973)Chapter VI: Offering of Shares and ProspectusAllotment and Acceptance after Offer to the Public165. No allotment unless minimum subscription received |
| 1) | No shares shall be allotted on any application made in pursuance of a prospectus for subscription unless the amount stated in that prospectus as the minimum amount which in the opinion of the directors of the company concerned must be raised by the issue of share capital in order to provide for the matters specified in paragraph 21 of Schedule 3 to this Act has been subscribed and the amount so stated has been paid to and received by the company. |
| 2) | For the purposes of subsection (1)- |
| a) | an amount stated in any cheque received by the company shall not be deemed to have been paid to and received by it until the amount of the cheque has been unconditionally credited to its account with its bankers; and |
| b) | any amount paid to and received by the company shall be reduced by the amount of any money, bill, promissory note or cheque which it has at any time delivered to the payer otherwise than in discharge of a debt bona fide due to him by the company. |
| 3) | The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as "the minimum subscription". |
| 4) | The amount paid on application shall be set apart by the directors as a separate fund in a separate account with a banking institution registered under the Banks Act, 1965 (Act No. 23 of 1965), and shall not be available for the purposes of the company or for the satisfaction of its debts until the minimum subscription has been made up. |
| 5) |
| a) | If the requirements prescribed in subsection (1) have not been complied with on the expiration of sixty days after the issue of the prospectus, all moneys received from applicants for shares shall forthwith be repaid to them without interest, and, if any such money is not so repaid within a period of eighty days after the issue of the prospectus, the directors and officers of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum reckoned from the expiration of the said period of eighty days. |
| b) | It shall be a defence to any claim under paragraph (a), or any charge under subsection (6), to prove that the default which is the subject of the claim or charge, was not due to any misconduct or negligence on the part of the defendant or the accused. |
| 6) | Any director or officer of the company who knowingly contravenes or permits the contravention of any provision of this section, shall, in addition to any other liability incurred under subsection (5) (a), be guilty of an offence. |