| Commentary

159 Money or money’s worth

| Commentary

D: PAYMENT FOR SHARES

159 Money or money’s worth

The general principle is that shares allotted by a company may be paid for in money or money’s worth (including goodwill and know-how)1. As a result, at least in the case of a private company, the directors are entitled to allot shares for a consideration other than cash and the court will not generally investigate the adequacy of that consideration unless it is obviously inadequate2. This provision appears to allow considerable scope for abuse, given the obvious difficulties of valuing either goodwill or know-how (and to a lesser extent many other assets)

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