Can shares be issued for assets other than cash?
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Yes. CA 1985, sec99(1) provides: Subject to the following...shares allotted
by a company, and any premium on them, may be paid up in money or money's worth
(including goodwill and know-how).
The only restriction on a private company in this connection is that the directors
should act in good faith and be satisfied that the assets are worth the value
put on them for the purposes of the allotment: Re Wragg Ltd. [1897] 1 Ch 796.
Public companies are subject to quite detailed restrictions. Detailed consideration
of these is beyond the scope of this database, but in summary they are:
sec 99(2:) Payment cannot be in the form of an undertaking to perform work
or services.
sec102: Payment cannot be in the form of an undertaking which is to be, or
may be, performed more than five years after the date of the allotment.
sec103 - sec116: Non-cash consideration has to be independently valued.
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