550. Public Company: Valuation Of Non-Cash Consideration For Shares
(1) A public company must not allot shares as fully or partly paid up otherwise than in cash unless-
(a) the consideration for the allotment has been independently valued in accordance with the provisions of this Chapter,
(b) the valuer’s report has been made to the company during the six months immediately preceding the allotment of the shares, and
(c) a copy of the report has been sent to the proposed allottee.
(2) For this purpose the application of an amount standing to the credit of-
(a) any of a company’s reserve accounts, or
(b) its profit and loss account,
in paying up (to any extent) shares allotted to members of the company does not count as consideration for the allotment.
Accordingly, subsection 550(1) does not apply in that case.
(3) If a company allots shares in contravention of subsection (1) and either-
(a) the allottee has not received the valuer’s report required to be sent to him, or
(b) there has been some other contravention of the requirements of this section or section 553 that the allottee knew or ought to have known amounted to a contravention,
the allottee is liable to pay the company an amount equal to the aggregate issue price of the shares (or, if the case so requires, so much of that aggregate as is treated as paid up by the consideration), with interest at the appropriate rate.