Commission to the agents of Preference Shares

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Debashis Mandal (Querist)
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28 June 2011 Respected Experts
A co is going to issue its Redeemable Pref Shares on Private Placement basis, Therefore is there any limit of payments of Commission to the agents of the Co - under Companies act or under SEBI or under any other act
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Debashis Mandal

Pravin Gupta CS

Pravin Gupta CS (Expert)
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28 June 2011 79. Power to issue shares at a discount.—

(1) A company shall not issue shares at a discount except as provided in this section.

(i) A company may issue at a discount shares in the company of a class already issued, if the following conditions are fulfilled, namely:—

(ii) Authorised by AOA and sanction by passing special resolution suvbject to approval of central govt.

(iii) >> maximum rate of discount not exceeds ten per cent,

(2) not less than one year has at the date of the issue elapsed since the date on which the company was entitled to commence business; and

(3) the shares to be issued at a discount are issued within two months after the date on which the issue is sanctioned by the Central Government

(4) Every prospectus relating to the issue of the shares shall contain particulars of the discount

>>>Penalty Rs. 500/- on non compliance of this sec.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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28 June 2011 Issue of Preference shares at a discount and payment of commission against issue of preference shares are two different issues and there is no restriction on payment of commission for getting funds through Preference Shares but the commission should be reasonable. Now, what should be reasonable is no where explained. In my opinion if it is restricted to 2% the same is reasonable.

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