Section 130. Power of company to pay interest out of capital in certain cases

(1) Where any shares of a company are issued for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a long period, the company may pay interest or returns on the amount of such share capital as is for the time being paid up and charge the interest or returns paid to share capital as part of the cost of the construction or provision.

(2) For the purposes of subsection (1)—

(a) the payment shall not be made unless it is authorized by the constitution or by special resolution and is approved by the Court;

(b) the payment shall be made only for such period as determined by the Court not exceeding the period of twelve months after the works or buildings have been actually completed or the plant provided;

(c) the rate of interest or returns shall not exceed five per centum per annum or such other rate as for the time being prescribed; and

(d) the payment of the interest or returns shall not operate as a reduction of the amount paid-up on the shares in respect of which it is paid.

(3) Before approving of any payment under paragraph (2)(a), the Court may, at the expense of the company—

(a) appoint a person to inquire and report as to the circumstances of the case; and

(b) require the company to give security for the payment of the costs of the inquiry.