Singapore legislation
Section 260
Section 260
Prohibition of allotment unless minimum subscription received
(1)
A person must not make an allotment of any securities or securities‑based derivatives contracts of a company or business trust unless —
the minimum subscription has been subscribed; and
the sum payable on application for the securities or securities‑based derivatives contracts so subscribed has been received by the company or the trustee‑manager, as the case may be.
(1A)
Despite subsection (1), if a cheque for the sum payable mentioned in subsection (1) has been received by the company or the trustee‑manager of the business trust (as the case may be), the sum is treated as not having been received by the company or the trustee‑manager (as the case may be) until the cheque is paid by the bank on which the cheque is drawn.
(2)
The minimum subscription must —
be calculated based on the price at which each share or debenture, each unit of share or debenture, or each unit or derivative of a unit in a business trust, is or will be offered; and
be reckoned exclusively of any amount payable otherwise than in cash.
(3)
The amount payable on application on each share or debenture, or each unit of share or debenture, or each unit or derivative of a unit in a business trust, offered must not be less than 5% of the price at which the share or debenture, or unit of share or debenture, or unit or derivative of a unit in a business trust, is or will be offered.
(4)
If the conditions referred to in subsection (1)(a) and (b) have not been satisfied on the expiration of 4 months after the first issue of the prospectus, all moneys received from applicants for securities or securities‑based derivatives contracts must be immediately repaid to them without interest.
(5)
If any money mentioned in subsection (4) is not repaid within 5 months after the issue of the prospectus, the directors of the company or the directors of the trustee‑manager of the business trust (as the case may be) are jointly and severally liable to repay that money with interest at the rate of 10% per annum from the expiration of the period of 5 months.
(6)
A director is not liable under subsection (5) if the director proves that the default in the repayment of the money was not due to any misconduct or negligence on the part of the director.
(7)
An allotment made by a company or a trustee‑manager of a business trust to an applicant in contravention of this section is voidable at the option of the applicant, which option may be exercised by written notice served —
if the allotment is made by a company, on the company —
within one month after the holding of the statutory meeting of the company; or
where the company is not required to hold a statutory meeting, or where the allotment is made after the holding of the statutory meeting, within one month after the date of the allotment; or
if the allotment is made by a trustee‑manager of a business trust, on the trustee‑manager of the business trust within one month after the date of the allotment.
(7A)
The allotment mentioned in subsection (7) is voidable even if the company or business trust is in the course of being wound up.
(7B)
A trustee‑manager of a business trust which contravenes any of the provisions of this section shall be guilty of an offence and shall be liable, in addition to the penalty or punishment for the offence —
to pay into the trust property of the business trust any loss, damages or costs which the business trust (represented by any diminishment in value to the trust property of the business trust) has sustained or incurred as a consequence of such contravention; and
to compensate the allottee for any loss, damages or costs which the allottee has sustained or incurred as a consequence of such contravention.
(7C)
Every director of a trustee‑manager of a business trust who knowingly contravenes or permits or authorises the contravention of any of the provisions of this section shall be guilty of an offence and shall be liable, in addition to the penalty or punishment for the offence —
to pay into the trust property of the business trust any loss, damages or costs which the business trust (represented by any diminishment in value to the trust property of the business trust) has sustained or incurred as a consequence of such contravention; and
to compensate the allottee for any loss, damages or costs which the allottee has sustained or incurred as a consequence of such contravention.
(7D)
Every director of a company who knowingly contravenes or permits or authorises the contravention of any of the provisions of this section shall be guilty of an offence and shall be liable, in addition to the penalty or punishment for the offence —
to compensate the company for any loss, damages or costs which the company has sustained or incurred as a consequence of such contravention; and
to compensate the allottee for any loss, damages or costs which the allottee has sustained or incurred as a consequence of such contravention.
(8)
No proceedings for the recovery of any compensation under subsection (7) may be commenced after the expiration of 2 years from the date of the allotment.
(9)
Any condition requiring or binding any applicant for securities or securities‑based derivatives contracts to waive compliance with any requirement of this section is void.