Section 208 - Power of company to pay interest out of capital in certain cases.

Interest out of capital permits charging interest on capital for long-term construction funding subject to corporate and central government approvals.

Companies may pay interest out of paid-up share capital when shares are issued to raise funds for construction or plant that will not be profitable for a long period, charging that interest to capital, provided the articles or a special resolution authorise it and the Central Government gives prior sanction; the Government may order an inquiry at the company's expense and limit the period and maximum rate of such payments, and such interest payments do not reduce the paid-up amount of the shares.