law: Companies Act, 1956
  Sec 76   -  Power to pay certain
  
  commissions and prohibition of payment of all other commissions, discounts,
  
  etc. 
  (1) A company may pay a commission to any
  
  person in consideration of :
  (a) his subscribing or agreeing to subscribe,
  
  whether absolutely or conditionally, for any shares in, or debentures of, the
  
  company, or
  (b) his procuring or agreeing to procure
  
  subscriptions, whether absolute or conditional, for any shares in, or
  
  debentures of, the company, if the following conditions are fulfilled, namely :
  
  
  (i) the payment of the commission is
  
  authorized by the articles ;
  (ii) the commission paid or agreed to be paid
  
  does not exceed in the case of shares, five per cent of the price at which the
  
  shares are issued or the amount or rate authorized by the articles, whichever
  
  is less, and in the case of debentures, two and a half per cent of the price at
  
  which the debentures are issued or the amount or rate authorized by the
  
  articles, whichever is less ;
  (iii) the amount or rate per cent of the
  
  commission paid or agreed to be paid is : in the case of shares or debentures
  
  offered to the public for subscription, disclosed in the prospectus; and in the
  
  case of shares or debentures not offered to the public for subscription,
  
  disclosed in the statement in lieu of prospectus, or in a statement in the
  
  prescribed form signed in like manner as a statement in lieu of prospectus and
  
  filed before the payment of the commission with the Registrar and, where a
  
  circular or notice, not being a prospectus inviting subscription for the shares
  
  or debentures, is issued, also disclosed in that circular or notice ;
  (iv) the number of shares or debentures which
  
  persons have agreed for a commission to subscribe absolutely or conditionally
  
  is disclosed in the manner aforesaid; and
  (v) a copy of the contract for the payment of
  
  the commission is delivered to the Registrar at the time of delivery of the
  
  prospectus or the statement in lieu of prospectus for registration.
  (2) Save as aforesaid and save as provided in
  
  section 79, no company shall allot any of its shares or debentures or apply any
  
  of its moneys, either directly or indirectly, in payment of any commission,
  
  discount or allowance, to any person in consideration of :
  (a) his subscribing or agreeing to subscribe,
  
  whether absolutely or conditionally, for any shares in, or debentures of, the
  
  company, or
  (b) his procuring or agreeing to procure
  
  subscriptions, whether absolute or conditional for any shares in, or debentures
  
  of, the company, whether the shares, debentures or money be so allotted or
  
  applied by being added to the purchase money of any property acquired by the
  
  company or to the contract price of any work to be executed for the company, or
  
  the money to be paid out of the nominal purchase money or contract price, or
  
  otherwise.
  (3) Nothing in this section shall affect the
  
  power of any company to pay such brokerage as it has heretofore been lawful for
  
  a company to pay.
  (4) A vendor to, promoter of, or other person
  
  who receives payment in shares, debentures or money from, a company shall have
  
  and shall be deemed always to have had power to apply any part of the shares,
  
  debentures or money so received in payment of any commission the payment of
  
  which, if made directly by the company, would have been legal under this
  
  section.
  (4A) For the removal of doubts it is hereby
  
  declared that no commission shall be paid under clause (a) of sub-section (1)
  
  to any person on shares or debentures which are not offered to the public for
  
  subscription :
  Provided  that where a person has subscribed or
  
  agreed to subscribe under clause (a) of sub-section (1) for any shares in, or
  
  debentures of, the company and before the issue of the prospectus or statement
  
  in lieu thereof any other person or persons has or have subscribed for any or
  
  all of those shares or debentures and that fact together with the aggregate
  
  amount of commission payable under this section in respect of such subscription
  
  is disclosed in such prospectus or statement, then, the company may pay
  
  commission to the first-mentioned person in respect of such subscription.
  (5) If default is made in complying with the
  
  provisions of this section, the company, and every officer of the company who
  
  is in default, shall be punishable with fine which may extend to five thousand
  
  rupees.