Hong Kong Ordinances

COMPANIES ORDINANCE - SECT 46

Power to pay certain commissions, and prohibition of payment of all other commissions, discounts, &c.

Commissions and Discounts

(1) It shall be 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-

   (a)  the payment of the commission is authorized by the articles; and

   (b)  the commission paid or agreed to be paid does not exceed 10 per cent
        of the price at which the shares are issued or the amount or rate
        authorized by the articles, whichever is the less; and

   (c)  the amount or rate per cent of the commission paid or agreed to be
        paid is-

        (i)    in the case of shares offered to the public for subscription,
               disclosed in the prospectus; or

        (ii)   in the case of shares not offered to the public for
               subscription, disclosed in the statement in lieu of prospectus,
               or in a statement in the specified form signed in like manner
               as a statement in lieu of prospectus and delivered before the
               payment of the commission to the Registrar for registration,
               and, where a circular or notice, not being a prospectus,
               inviting subscription for the shares is issued, also disclosed
               in that circular or notice; and (Amended 3 of 1997 s. 12)

   (d)  the number of shares which persons have agreed for a commission to
        subscribe absolutely is disclosed in manner aforesaid.

(2) Save as aforesaid, no company shall 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 subscribing or agreeing to
subscribe, whether absolutely or conditionally, for any shares of the company,
or procuring or agreeing to procure subscriptions, whether absolute or
conditional, for any shares in the company, whether the shares or money be so
applied by being added to the purchase money of any property acquired by the
company or to the contract price of any work to be executed for the company,
or the money be paid out of the nominal purchase money or contract price, or
otherwise.

(3) Nothing in this section shall affect the power of any company to pay such
brokerage as it has heretofore been lawful for a company to pay.

(4) A vendor to, promoter of, or other person who receives payment in money or
shares from, a company shall have and shall be deemed always to have had power
to apply any part of the money or shares so received in payment of any
commission, the payment of which, if made directly by the company, would have
been legal under this section.

(5) If default is made in complying with the provisions of this section
relating to the delivery to the Registrar of the statement in the
specified form, the company and every officer of the company who is in default
shall be liable to a fine. (Amended 22 of 1950 Schedule; 6 of 1984 s. 259; 7
of 1990 s. 2; 3 of 1997 s. 12) [cf. 1929 c. 23 s. 43 U.K.]