CAP. 32]
Power of
company to
pay interest
out of
capital in
certain cases.
c. 23, s. 54.
Companies.
57. (1) Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of 19 & 20 Geo. 5, any plant which cannot be made profitable for a lengthened period, the company may pay interest on so much of that share capital as is for the time being paid up for the period and subject to the conditions and restrictions in this section mentioned, and may charge the sum so paid by way of interest to capital as part of the cost of construction of the work or building, or the provision of plant: Provided that-
22 of 1950.
Schedule.
(a) no such payment shall be made unless it is authorized by the articles or by special resolution;
(b) no such payment, whether authorized by the articles or by special resolution, shall be made without the previous sanction of the court;
(c) before sanctioning any such payment the court may, at the expense of the company, appoint a person to inquire and report to them as to the circumstances of the case, and may before making the appointment, require the company to give security for the payment of the costs of the inquiry;
(d) the payment shall be made only for such period as may be determined by the court, and that period shall in no case extend beyond the close of the half year next after the half year during which the works or buildings have been actually completed or the plant provided;
(e) the rate of interest shall in no case exceed four per cent per annum or such other rate as may for the time being be prescribed by the court;
(f) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid;
(g) the accounts of the company shall show the share capital on which, and the rate at which, interest has been paid out of capital during the period to which the accounts relate.
(2) If default is made in complying with proviso (g) to subsection (1), the company and every officer of the company who is in default shall be liable to a fine of two thousand dollars.
[56
48
CAP. 32]
Power of
company to
pay interest
out of
capital in
certain cases.
c. 23, s. 54.
Companies.
57. (1) Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of 19 & 20 Geo. 5, any plant which cannot be made profitable for a lengthened period, the company may pay interest on so much of that share capital as is for the time being paid up for the period and subject to the conditions and restrictions in this section mentioned, and may charge the sum so paid by way of interest to capital as part of the cost of construction of the work or building, or the provision of plant: Provided that-
22 of 1950.
Schedule.
(a) no such payment shall be made unless it is au-
thorized by the articles or by special resolution; (b) no such payment, whether authorized by the articles or by special resolution, shall be made without the previous sanction of the court;
(c) before sanctioning any such payment the court may, at the expense of the company, appoint a person to inquire and report to them as to the circumstances of the case, and may before making the appoint- ment, require the company to give security for the payment of the costs of the inquiry;
(d) the payment shall be made only for such period as may be determined by the court, and that period shall in no case extend beyond the close of the half year next after the half year during which the works or buildings have been actually completed or the plant provided;
(e) the rate of interest shall in no case exceed four per cent per annum or such other rate as may for the time being be prescribed by the court;
(f) the payment of the interest shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid;
(g) the accounts of the company shall show the share capital on which, and the rate at which, interest has been paid out of capital during the period to which the accounts relate.
(2) If default is made in complying with proviso (g) to subsection (1), the company and every officer of the com-' pany who is in default shall be liable to a fine of two thousand dollars.
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