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of <h1>Companies Can Pay Interest from Capital for Construction Under Section 208, Requires Government Approval, Capped at 12% Annually.</h1> Section 208 of the Companies Act, 1956, allows companies to pay interest out of capital when shares are issued to fund construction projects or plant provisions that won't be profitable immediately. Such payments must be authorized by the company's articles or a special resolution and require prior approval from the Central Government. The government may appoint an investigator at the company's expense before granting approval. Interest payments are limited to a specific period and cannot exceed a rate set by the government, currently capped at 12% per annum. These payments do not reduce the paid-up share capital and exclude companies governed by specific railway and tramway acts.
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