63B. Lodgment of documents in relation to allotment Flashcards
63B. Lodgment of documents in relation to allotment
General overview
[63B.01] Most shares are allotted in cash, although a company often allots shares for non-cash consideration as when it is engaged in takeover bids or mergers and acquisitions where the consideration for the transaction may be made by way of shares. Section 63B provides the reporting requirement for the company when shares are allotted for a non-cash consideration. Chiefly, a copy of the contract in writing by virtue of which the shares are allotted has to be lodged with ACRA; or if the allotment is made pursuant to an oral contract, or a provision in the constitution, or in payment of a script dividend or payment by the company of unissued shares to which the shareholders have become entitled, a statement of prescribed particulars referred to in s 63B(3) shall be lodged with ACRA.
Allotment “otherwise than in cash”
[63B.02] Formation expenses of the company and the acquisition of patent rights could be met by allotting fully-paid shares: Baron Uno Carl Samuel Akerhielm & Anor v Rolf De Mare & Ors 1959] 3 WLR 108, PC . For fully paid-up shares in discharge of a debt, see Re Lands Allotment Co [1894] 1 Ch 616, CA ; Intraco Ltd v Multi-Pak Singapore Pte Ltd [1994] 3 SLR(R) 1064; [1994] SGCA 142. An allotment of shares in a company as consideration for the purchase of the shares of another company is not “financial assistance” within s 76 and is valid: Wu Yang Construction Group Ltd v Mao Yong Hui & Anor [2008] 2 SLR(R) 350; [2007] SGCA 55, CA ; Datuk Tan Leng Teck v Sarjana Sdn Bhd & Ors [1997] 4 MLJ 329. Further, see cases on “financial assistance” for the acquisition or purchase of shares in a company: s 76. Financial assistance provided by the subsidiary to the holding company is not an infringement of s 76: PP v Lew Syn Pau & Anor [2006] 4 SLR(R) 210; [2006] SGHC 146, HC. English cases: Chaston v SWP Group plc [2002] EWCA Civ 1999; [2003] 1 BCLC 675 ; considered Charterhouse Investment Trust Ltd v Tempest Diesels Ltd [1986] BCLC 1 ; MT Realisations Ltd v Digital Equipment Co Ltd [2003] EWCA Civ 494; [2003] 2 BCLC 117 ; Dyment v Boyden [2004] EWCA Civ 1568; [2005] 1 WLR 792 ; Armour Hicks Northern Ltd v Armour Trust Ltd [1980] 1 WLR 1520 . Where the principal purpose is not the acquisition of shares but an incidental part, see Brady v Brady [1989] AC 755; [1988] 2 All ER 617, HL . Consequences of breach: Re Hill and Tyler (in administration) [2004] EWCA 1261; [2005] 1 BCLC 41 ; Belmont Finance Corp Ltd v Williams Furniture Ltd [1979] Ch 250, CA . Actions may be taken up against directors for breach of trust or constructive trust on grounds of infringement of s 76: Selangor United Rubber Estates Ltd v Cradock & Ors (No 3) [1968] 1 WLR 1555, Ch D .
[63B.03] Allotment is not a “purchase” within the meaning of s 76: Re VGM Holdings Ltd [1942] 1 Ch 235, CA. Cases where shares are issued for non-cash consideration: see Henry Head & Co Ltd v Ropner Holdings Ltd [1952] Ch 124 . The price paid by the company for the property it received in exchange for its shares is valid and binding in the absence of fraud: Re Wragg [1897] 1 Ch 796, CA ; followed Pell’s case (1869) 5 Ch App 11; and Anderson’s case (1877) 7 Ch D 75.
