Prohibition of commissions, discounts and allowances
552General prohibition of commissions, discounts and allowances
(1)Except as permitted by section 553 (permitted commission), a company must not 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—
(a)subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or
(b)procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.
(2)It is immaterial how the shares or money are so applied, whether by being added to the purchase money of property acquired by the company or to the contract price of work to be executed for the company, or being paid out of the nominal purchase money or contract price, or otherwise.
(3)Nothing in this section affects the payment of such brokerage as has previously been lawful.
553Permitted commission
(1)A company may, if the following conditions are satisfied, pay a commission to a person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.
(2)The conditions are that—
(a)the payment of the commission is authorised by the company’s articles; and
(b)the commission paid or agreed to be paid does not exceed—
(i)10% of the price at which the shares are issued, or
(ii)the amount or rate authorised by the articles,
whichever is the less.
(3)A vendor to, or promoter of, or other person who receives payment in money or shares from, a company may apply any part of the money or shares so received in payment of any commission the payment of which directly by the company would be permitted by this section.