The Article of Association of ABC Ltd contained a provision that up to 4 of issue price of the share...........

Companies Act-Phase (I & II) Directors - powers and appointment

The Article of Association of ABC Ltd. contained a provision that up to 4% of issue price of the shares may be paid as underwriting commission to the underwriters. The Board of directors of ABC Ltd. decided to pay 5% underwriting commission. State the validity.

Valid

Invalid

Neutral

Can’t say

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Explanation:

As per Rule 13 of Companies(Prospectus and allotment of securities) Rules, 2014 the rate of commission paid or agreed to be paid shall not exceed 5% of the price at which the shares are issued or a rate authorized by the article, whichever is less