§ 61 — Restrictions on commencement of business in certain circumstances

61.—(1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company must not commence any business or exercise any borrowing power —(a)

if any money is or may become liable to be repaid to applicants for any shares or debentures offered for public subscription by reason of any failure to apply for or obtain permission for listing for quotation on any securities exchange; or

(b)

unless —(i)

shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;

(ii)

every director has paid to the company on each of the shares taken or contracted to be taken by him or her, and for which he or she is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription; and

(iii)

there has been lodged with the Registrar a declaration in the prescribed form by —(A)

the secretary or one of the directors of the company; or

(B)

a registered qualified individual authorised by the company,

verifying that sub‑paragraphs (i) and (ii) have been complied with.

[36/2014]

(2) Where a public company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the company must not commence any business or exercise any borrowing power unless —(a)

there has been lodged with the Registrar a statement in lieu of prospectus which complies with the provisions of this Act;

(b)

every director of the company has paid to the company on each of the shares taken or contracted to be taken by him or her, and for which he or she is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and

(c)

there has been lodged with the Registrar a declaration in the prescribed form by —(i)

the secretary or one of the directors of the company; or

(ii)

a registered qualified individual authorised by the company,

verifying that paragraph (b) has been complied with.

[36/2014]

(3) The Registrar must, on the lodgment of the declaration under subsection (1)(b)(iii) or (2)(c) (as the case may be), issue a notice in the prescribed form that the company is entitled to commence business and to exercise its borrowing powers; and that notice is conclusive evidence of the matters stated in it.

(4) Any contract made by a company before the date on which it is entitled to commence business is provisional only and is not binding on the company until that date, and on that date it becomes binding.

(5) Where shares and debentures are offered simultaneously by a company for subscription, nothing in this section prevents the receipt by the company of any money payable on application for the debentures.

(6) If any company commences business or exercises borrowing powers in contravention of this section, every person who is responsible for the contravention shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $4,000 and to a default penalty of $250.

(7) Upon the application of a company which has received a notice under subsection (3) and payment of the prescribed fee, the Registrar must issue to the company a certificate confirming that the company is entitled to commence business and to exercise its borrowing powers, and that certificate is conclusive evidence of the matters stated in it.

—(1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company must not commence any business or exercise any borrowing power —(a)

if any money is or may become liable to be repaid to applicants for any shares or debentures offered for public subscription by reason of any failure to apply for or obtain permission for listing for quotation on any securities exchange; or

(b)

unless —(i)

shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;

(ii)

every director has paid to the company on each of the shares taken or contracted to be taken by him or her, and for which he or she is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription; and

(iii)

there has been lodged with the Registrar a declaration in the prescribed form by —(A)

the secretary or one of the directors of the company; or

(B)

a registered qualified individual authorised by the company,

verifying that sub‑paragraphs (i) and (ii) have been complied with.

[36/2014]

(2) Where a public company having a share capital has not issued a prospectus inviting the public to subscribe for its shares, the company must not commence any business or exercise any borrowing power unless —(a)

there has been lodged with the Registrar a statement in lieu of prospectus which complies with the provisions of this Act;

(b)

every director of the company has paid to the company on each of the shares taken or contracted to be taken by him or her, and for which he or she is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash; and

(c)

there has been lodged with the Registrar a declaration in the prescribed form by —(i)

the secretary or one of the directors of the company; or

(ii)

a registered qualified individual authorised by the company,

verifying that paragraph (b) has been complied with.

[36/2014]

(3) The Registrar must, on the lodgment of the declaration under subsection (1)(b)(iii) or (2)(c) (as the case may be), issue a notice in the prescribed form that the company is entitled to commence business and to exercise its borrowing powers; and that notice is conclusive evidence of the matters stated in it.

(4) Any contract made by a company before the date on which it is entitled to commence business is provisional only and is not binding on the company until that date, and on that date it becomes binding.

(5) Where shares and debentures are offered simultaneously by a company for subscription, nothing in this section prevents the receipt by the company of any money payable on application for the debentures.

(6) If any company commences business or exercises borrowing powers in contravention of this section, every person who is responsible for the contravention shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $4,000 and to a default penalty of $250.

(7) Upon the application of a company which has received a notice under subsection (3) and payment of the prescribed fee, the Registrar must issue to the company a certificate confirming that the company is entitled to commence business and to exercise its borrowing powers, and that certificate is conclusive evidence of the matters stated in it.