"The Companies Act, 2013 permits a company to pay certain commissions and prohibits the payment of all other commissions, discounts etc." Comment.

Section 40 of the Companies Act, 2013, read with the Company (Prospectus and Allotment of Securities) Rules, 2014 as amended, permits a company to pay certain commissions and prohibits the payment of all other commissions, discounts etc. The company may exercise the powers of paying commissions conferred by sub-section (6) of section 40 of the Act, provided that the rate and amount of the commission paid or agreed to be paid shall be disclosed in the manner required by that section and the rules made thereunder. The rate or amount of the commission shall not exceed the rate or amount prescribed in rules made there under subsection (6) of section 40 of the Act. The commission may be satisfied by the payment of cash or the allotment of fully or partly paid shares or partly in the one way and partly in the other. As per Rule 13 of the Company (Prospectus and Allotment of Securities) Rules, 2014 as amended, a company may pay commission to any person in connection with the subscription or procurement of subscription to its securities, whether absolute or conditional, subject to the following conditions, namely: The payment of such commission shall be authorized in the company's articles of association; The commission may be paid out of proceeds of the issue or the profit of the company or both; The rate of commission paid or agreed to be paid shall not exceed, in case of shares, five percent of the price at which the shares are issued or a rate authorised by the articles, whichever is less, and in case of debentures, shall not exceed two and a half per cent of the price at which the debentures are issued, or as specified in the company's articles, whichever is less; The prospectus of the company shall disclose - the name of the underwriters; the rate and amount of the commission payable to the underwriter; and the number of securities which is to be underwritten or subscribed by the underwriter absolutely or conditionally there shall not be paid commission to any underwriter on securities which are not offered to the public for subscription; a copy of the contract for the payment of commission is delivered to the Registrar at the time of delivery of the prospectus for registration.