Capital contributed by the shareholders of a company is known as share capital. When companies require additional funds from the public, the company would normally use the services of a financial institution to handle the additional share issue on their behalf. Craft Ltd underwrites an issue of 250 000 ordinary shares at R3 each in Sontech Ltd. Craft Ltd charges commission of 8% for their services . The public took up 235 000 of the shares that were on offer.

REQUIRED:

a) Please explain and discuss whether Craft Ltd has any liability towards Sontech Ltd, and if so, what this will amount to?

b) Calculate the commission payable to Craft Ltd?