## Section 40 — Securities to be Dealt with in Stock Exchanges
### Requirement before public offer
Every company making public offer shall, BEFORE making such offer:
- Make an application to one or more recognised stock exchanges, AND
- Obtain permission for the securities to be dealt with in such stock exchange(s).
### Prospectus must state
1. That application has been made to the recognised stock exchange(s).
2. The name(s) of such stock exchange(s).
### Separate bank account for application money
Application money shall be kept in a separate bank account in a Scheduled Bank and shall be utilised only for:
- Adjustment against allotment of securities (where stock exchange permission is granted), OR
- Repayment of application money to applicants in case the company is unable to allot (e.g., listing permission refused).
### Default — penalty
The company and every officer in default: punishable with fine.
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### Underwriting Commission
A company may pay commission to underwriters subject to the following conditions:
| Condition | Requirement |
|---|---|
| AOA authorisation | Articles must authorise the payment |
| Source | Out of proceeds of issue OR profits of the company |
| Maximum rate — Shares | 5% of issue price OR rate fixed in AOA (whichever is LESS) |
| Maximum rate — Debentures | 2.5% of issue price OR rate fixed in AOA (whichever is LESS) |
| Disclosure in prospectus | Name of underwriter and rate of commission must be stated |
| No commission | If securities are NOT offered to public |
| Underwriting contract | Must be filed with ROC at the time of registration |