Section 186. Prohibition of allotment unless minimum subscription received

(1) No allotment shall be made of any shares of a company offered to the public or offered for subscription or purchase or where an invitation to subscribe for or purchase shares is made under a prospectus that is registered under the Capital Markets and Services Act 2007 unless—

(a) the minimum subscription has been subscribed; and

(b) the amount payable on application for the shares so subscribed has been received by the company,

but if a cheque for the sum payable has been received by the company, the sum shall be deemed not to have been received by the company until the cheque is paid by the bank on which the cheque is drawn.

(2) The minimum subscription shall be—

(a) calculated on the offer price of each share; and

(b) reckoned exclusively of any amount payable otherwise than in cash.

(3) The amount payable on application on each share offered to the public or offered under a prospectus that is registered under the Capital Markets and Services Act 2007 shall not be less than five per centum of the offer price of the share.

(4) If the conditions referred to in paragraphs (1)(a) and (b) have not been satisfied on the expiration of four months after the first issue of the prospectus—

(a) all moneys received from applicants for shares shall be forthwith refunded to the applicants without interest or returns; and

(b) if such money is not refunded within five months after the issue of the prospectus, the directors of the company shall be jointly and severally liable to refund that money with interest or returns at the rate of ten per centum per annum from the expiration of the period of five months, but a director shall not be liable if the director proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(5) Notwithstanding that the company is in the course of being wound up, an allotment made by a company to an applicant in contravention of this section or subsection 188(1) shall be voidable at the option of the applicant which may be exercised by a written notice served on the company not later than thirty days from the date of the allotment.

(6) Any condition requiring or binding any applicant for shares to waive compliance with any requirements of this section shall be void.

(7) If an allotment of—

(a) shares or debentures is made on the basis of a prospectus after the expiration of six months or such longer period as the Registrar may allow from the date of issue of the prospectus; or

(b) securities is made on the basis of a prospectus that is registered under the Capital Markets and Services Act 2007 later than the period after the date of issue of the prospectus as the Securities Commission may specify,

the allotment shall not by reason only of that fact be voidable or void.

(8) A company, officer or promoter of that company or a proposed company shall not authorize or permit an allotment of—

(a) any shares or debentures to the public on the basis of a prospectus after the expiration of six months or such longer period as the Registrar may allow from the date of issue of the prospectus; or

(b) any securities as defined in the Capital Markets and Services Act 2007 on the basis of a prospectus that is registered under that Act later than the period after the date of issue of the prospectus as the Securities Commission may specify.

(9) The company and every officer or any promoter of a company or a proposed company who contravene subsection (8) commit an offence and shall, on conviction, be liable—

(a) in the case of the company, to a fine not exceeding five million ringgit; and

(b) in the case of the officer or promoter of a company or a proposed company, to imprisonment for a term not exceeding five years or to a fine not exceeding five million ringgit or to both.

(10) Every director of a company who knowingly contravenes or permits or authorizes the contravention of this section or subsection 190(1) shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding one million ringgit or to both and, in addition, shall be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee has sustained or incurred but no proceedings for the recovery of any such compensation shall be commenced after the expiration of two years from the date of the allotment.