Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 203

203. (1) Subject to section 204, a company shall not apply any of its shares
or capital money either directly or indirectly in making a payment to a person
in consideration of the person subscribing or agreeing to subscribe, whether
absolutely or conditionally, or procuring or agreeing to procure
subscriptions, whether absolute or conditional, for shares in the company,
whether the shares are or the money is so applied by being added to the
purchase price of property acquired by the company or to the contract price of
work to be executed for the company or the money is paid out of the nominal
purchase price or contract price or otherwise.

(2) Without limiting the generality of subsection (1), but subject to
section 190, a company shall not issue shares at a discount.

(3) A company that contravenes this section is not guilty of an offence by
virtue of this section or section 1311, but each officer of the company who is
involved in the contravention contravenes this subsection.

(4) Where:

   (a)  a person is convicted by a court of an offence under this section in
        relation to a company; and

   (b)  the court is satisfied that the company has suffered loss or damage as
        a result of the act that constituted the offence; the court may, in
        addition to imposing a penalty, order the person to pay compensation
        to the company of such amount as the court specifies, and any such
        order may be enforced as if it were a judgment of that court.

(5) Where a contravention of this section takes place:

   (a)  if a person other than the company concerned, being a person who was,
        at the time of the contravention, aware of the matters constituting
        the contravention, has made a profit as a result of the contravention,
        the company may, whether or not that person or any other person has
        been convicted of an offence under subsection (3) in relation to that
        contravention, recover from the person as a debt due to the company by
        action in any court of competent jurisdiction an amount equal to the
        profit; and

   (b)  where the company concerned has suffered loss or damage as a result of
        the contravention-the company may recover an amount equal to the loss
        or damage from any person involved in the contravention, whether or
        not that person or any other person has been convicted of an offence
        under subsection (3) in relation to that contravention, as a debt due
        to the company by action in any court of competent jurisdiction.